LIBRARY 

OF   THE 

UNIVERSITY  OF  CALIFORNIA. 
Class 

The  Application  of  Capital 

to  Land 

Sir  Edward  West 


Cte'  Profei 

Johns  H: 


A   Reprint   of  Economic   Tracts 

Edited  by 

JACOB  H.  HOLLANDER,  Ph.  D. 

Associate  Professor  of  Political  Economy 
Johns  Hopkins  University 


Sir   Edward   West 

on 

The  Application  of  Capital  to  Land 

1815 


^9^ 


Copyrighted  1903,  by 
THE  JOHNS  HOPKINS  PRESS 


THE   PRIEDBNWALD   COMPANY 
BALTIMORE,  MD.,  U.  S.  A. 


or    r,-ir 


INTRODUCTION 

A  careful  student  of  the  history  of  economic  theories  has  de- 
scribed Sir  Edward  West  as  "  the  first,  though  not  the  name-father 
and  greatest  of  the  'Ricardian'  school,"^  and  has  added  in  further 
explanation,  "  It  is  impossible  to  read  West's  pamphlet  without 
seeing  that  the  form  in  which  the  '  law  of  diminishing  returns ' 
was  subsequently  taught,  and  the  phraseology  in  which  it  was  ex- 
pressed, are  far  more  due  to  him  than  is  imagined  by  those  who 
only  know  him  as  the  subject  of  a  civil  reference  in  Ricardo's 
preface."  - 

This  comparative  neglect  dates  back  to  West's  contemporaries. 
"  I  have  read  his  book  with  attention,  and  I  find  that  his  views 
agree  very  much  with  my  own,"  wrote  Ricardo  to  Malthus  on 
March  9,  1815.'  In  1817,  in  the  Preface  (iv)  to  the  "  Principles 
of  Political  Economy  and  Taxation,"  Ricardo  deliberately  linked 
West  with  Malthus  as  having  "  presented  to  the  world,  nearly 
at  the  same  moment,  the  true  doctrine  of  rent."  But  a  year 
later  (September  18,  1818),  his  verdict  expressed  to  Hutches 
Trower  was  distinctly  vaguer:  "  His  pamphlet  was  ingen- 
ious, and  he  had  a  glimpse  of  the  true  doctrine  of  rent  and 
profits."  *  In  Ricardo's  subsequent  writings,  formal  and  informal. 
West  is  not  again  referred  to.  Malthus  and  James  Mill  make  no 
mention  of  him.  Even  McCulloch,  whose  scent  for  anything 
like  an  '  anticipation '  of  an  accepted  doctrine  was  the  keenest, 
merely  speaks  of  the  rent  tracts  of  West  and  Malthus  as  "two 
pamphlets  of  extraordinary  merit,  published  nearly  at  the  same 
moment,"  and  then  summarily  disposes  of  both  by  adding,  "  But 
the  investigations  of  these  gentlemen,  though  of  great  importance, 
were  comparatively  limited  in  their  object."  ^   It  was  only  at  the 

^  Cannan,  "  A  History  of  the  Theories  of  Production  and  Distri- 
bution in  English  Political  Economy  from  1776  to  1848  "  (London, 
1893),  p.  279. 

-  Ibid.,  p.  160. 

'"Letters  of  David  Ricardo  to  Thomas  Robert  Malthus,  1810- 
1823"  (ed.  Bonar.     Oxford:  1887),  p.  63. 

* "  Letters  of  David  Ricardo  to  Hutches  Trower  and  others,  1811- 
1823  "  (ed.  Bonar  and  Hollander.     Oxford:  1899),  p.  58. 

'  McCulloch,  "  A  Discourse  on  the  Rise,  Progress,  Peculiar  Ob- 
jects, and  Importance  of  Political  Economy:  containing  an  outline 
of  a  course  of  lectures  on  the  principles  and  doctrines  of  that 
science"   (Edinburgh,  1824),  p.  65.     Cf.  also  his  "The  Principles 


ooo  "^ 


4  •  Introduction 

hands  of  ready  pamphleteers,  like  William  Jacob®  and  Arthur 
Young/  that  West  was  accorded  a  larger  place,  and  this  recog- 
nition was  naturally  enough  transient. 

Within  a  decade  after  its  appearance.  West's  pamphlet,  pseudo- 
nymous and  probably  of  limited  circulation,  had  been  virtually 
forgotten.  Even  his  "  Price  of  Corn  and  Wages  of  Labour,"  * 
published  in  1826  with  its  spirited  claim  to  the  discovery  of  other 
economic  principles  then  already  identified  as  Ricardian,  failed 
apparently  to  receive  the  slightest  attention.  Thereafter  West's 
name,  like  James  Anderson's,  appears  in  economic  writing  merely 
in  a  crass  qualification  of  the  familiar  statement  that  the  difeer- 
ential  law  of  rent  was  put  forth  by  Malthus  and  developed  and 
applied  by  Ricardo. 

Bare  details  of  West's  personal  life  have  come  down  to  us.*  He 
was  born  in  St.  Marylebone,  Middlesex,  in  1782,"  his  family 
being  well-connected  and  in  part  distinguished.  He  was  educated 
at  Harrow  and  Oxford,  receiving  the  bachelor's  degree  in  1804,  the 
master's  title  in  1807,  and  holding  a  fellowship  in  University  Col- 
lege thereafter.  He  was  called  to  the  bar,  and  in  1817,  pub- 
lished  "  A   Treatise   on   Extents." "    He   relinquished   academic 


of  Political  Economy:  with  a  sketch  of  the  rise  and  progress  of 
the  science"  (Edinburgh,  1825),  p.  265,  and  "The  Literature  of 
Political  Economy"  (London,  1845),  p.  33. 

* "  A  Letter  to  Samuel  Whitbread,  Esq.  M.  P.,  being  a  sequel  to 
Considerations  on  the  Protection  required  by  British  Agriculture; 
to  which  are  added  remarks  on  the  publications  of  A  Fellow  of 
University  College,  Oxford;  of  Mr.  Ricardo,  and  Mr.  Torrens " 
(London,  1815). 

^  "  An  Inquiry  into  the  Rise  of  Prices  in  Europe,  during  the  last 
twenty-five  years,  compared  with  that  which  has  taken  place  in 
England;  with  observations  on  the  effects  of  high  and  low  prices  " 
(London,  1815),  published  in  "The  Pamphleteer"  (London), 
vol.  vi,  pp.  165-204. 

* "  Price  of  Corn  and  Wages  of  Labour,  with  observations  upon 
Dr.  Smith's,  Mr,  Ricardo's  and  Mr.  Malthus's  doctrines  upon  those 
subjects;  and  an  attempt  at  an  exposition  of  the  causes  of  the 
fluctuation  of  the  price  of  corn  during  the  last  thirty  years" 
(London,  1826). 

*  See  in  particular  the  memoir  in  "  The  Annual  Biography  and 
Obituary:  1830"  (London,  1830),  the  materials  for  which,  we 
are  told  by  the  editor,  "  have  been  derived  from  a  private  and 
authentic  source." 

"  "  Dictionary  of  National  Biography  "  (ed.  Lee),  vol.  Ix,  p.  329. 

"  "  A  Treatise  of  the  Law  and  Practice  of  Extents  in  Chief  and 
in  Aid.  With  an  appendix  of  forms  of  writs;  affidavits  for  ex- 
tents; pleadings  to  extents;  rules  of  court;  and  table  of  fees" 
(London,  1817). 


Inteoduction  5 

oflBce  and  active  legal  practice,  in  which  he  had  already  attained 
a  considerable  measure  of  success,  to  accept  the  office  of  recorder 
of  Bombay.  He  was  knighted  on  July  5,  1822,  and  upon  the 
establishment  of  the  supreme  court  in  1824,  was  made  chief  jus- 
tice. His  two  most  important  public  acts  were  rejection  of  the 
Calcutta  regulation  for  controlling  the  press,  and  reformation  of 
the  police  of  Bombay.  He  died  at  Poonah  in  August,  1828.  An 
address,  signed  by  a  large  body  of  natives  and  presented  to  the 
surviving  judges  of  the  presidency,  extols  West's  personal  and 
judicial  virtues,  notably  his  activity  in  connection  with  the  admis- 
sion of  natives  to  jury  service,  and  refers  to  a  sum  of  money  hav- 
ing been  subscribed  and  made  over  to  the  Native  Education  Society 
for  the  establishment  of  "  Chief  Justice  West's  Scholarships  and 
Prizes." 

West's  interest  in  political  economy  was  sustained.  We  are 
told  that  he  commenced  its  study  shortly  after  leaving  Oxford  and 
that  "  it  occupied  his  attention,  more  or  less,  until  his  death."  " 
But  with  whatever  zeal  pursued,  the  study  was  distinctly  an 
avocation.  In  publishing  his  first  pamphlet  in  1815,  West  yielded 
to  the  representations  of  friends  that  interest  in  other  pursuits 
might  perhaps  injure  his  professional  career  and  omitted  his 
name  from  the  title  page.  Acquaintance  with  Brougham,  Ricardo 
and  possibly  Malthus,^'  exerted  no  influence  in  this  direction 
and  it  was  not  until  the  appearance  of  Ricardo's  "  Protection  to 
Agriculture  "  in  1822,  that  West  again  attempted  formal  economic 
writing.  This  manuscript  was  taken  with  him  to  India  in  nearly 
finished  form ;  but  delays  occurred  and  when  it  finally  appeared  in 
1826  as  "  Price  of  Corn  and  Wages  of  Labour,"  the  subject  had 
lost  much  of  its  timeliness.  West's  final  and  most  ambitious 
economic  work  was  in  preparation  at  the  time  of  his  death.  We 
know  nothing  of  it  beyond  what  the  author  of  the  biographical 
memoir,  referred  to  above,  has  written:  "It  would,  probably,  have 
amounted  to  a  general  treatise  on  the  whole  subject,  and  it  had 
occupied  his  mind  intensely  for  the  greater  part  of  his  leisure, 
for  more  than  a  year  preceding  his  death.  He  had  received  an 
offer  from  one  of  the  most  eminent  publishers  in  London,  to 
undertake  the  publication  of  it;  and  it  is  to  be  hoped  that,  at  least, 
a  large  portion  of  the  work  has  been  left  in  a  state  which  will 
admit  of  its  being  yet  given  to  the  world."    It  is  at  least  interest- 


""The  Annual  Biography  and  Obituary:  1830"  (London, 
1830),  p.  106. 

""Letters  of  David  Ricardo  to  Thomas  Robert  Malthus,  1810- 
1823"  (ed.  Bonar.  Oxford:  1887)  p.  63. 


6  Introduction 

ing  to  conjecture  that  had  his  life  been  prolonged,  or  had  cir- 
cumstances marked  out  for  him  a  less  absorbing  career  than  legal 
activity  and  far-removed  judicial  office,  West's  influence  upon 
the  development  of  English  economic  thought  would  have  been 
considerable. 

West's  first  pamphlet,  like  Malthus's  rent  tract,  owes  its  formal 
publication  to  the  corn-law  controversies  of  1813-1815.  But  to 
West  as  to  Malthus  the  essential  principle  of  increasing  costs  in 
agriculture  had  occurred  "  some  years  ago,"  ^*  and  we  are  again 
led  to  the  conclusion  that  the  genesis  of  the  law  of  diminishing 
returns  is  referable  to  that  extraordinary  condition  of  British 
agriculture  in  the  preceding  decade,  the  conspicuous  features  of 
which — extension  of  cultivation  and  application  of  capital — ^were 
familiar  to  all  students  of  economic  conditions  long  before  parlia- 
mentary blue-books  gave  them  wide  publicity." 

In  the  present  edition  the  general  appearance  of  the  title  page  of 
the  tract  has  been  preserved,  the  original  pagination  has  been  in- 
dicated and  a  few  annotations  have  been  appended. 

Baltimobe,  June,  1903. 

"See  p.  9,  below. 

"Cf.  Introduction  (p.  4)  to  the  reprint  of  Malthus,  "An  In- 
quiry into  the  Nature  and  Progress  of  Rent,  and  the  principles 
by  which  it  is  regulated"  (ed.  Hollander.     Baltimore:    1903). 


ESSAY 

ON  THE 

APPLICATION  OF  CAPITAL 

TO 
WITH 

OBSERVATIONS 

SHEWING    THE 

IMPOLICY 

OF 

ANY  GREAT  RESTRICTION  OF  THE 
IMPORTATION  OF  CORN, 

AND 

THAT  THE  BOUNTY  OF  1688  DID  NOT  LOWER  THE 
PRICE  OF  IT. 


A  FELLOW  OF  UNIVERSITY  COLLEGE, 
OXFORD. 


LONDON: 
PRINTED  FOR  T.  UNDERWOOD,  33,  FLEET  STREET 

By  C.  Roworth.  Bell  Yard,  Temple  Bar. 

1815. 


ESSAY,  &c. 


The  chief  object  of  this  essay  is  the  publication  of  a  prin- 
ciple in  political  economy,  which  occurred  to  me  some  years 
ago;  and  which  appears  to  me  to  solve  many  difficulties  in 
the  science,  which  I  am  at  a  loss  otherwise  to  explain. 

On  reading  lately  the  reports  of  the  com  committees/  I 
found  my  opinion  respecting  the  existence  of  this  principle 
•  confirmed  by  many  of  the  witnesses,  whose  evidence  is  there 
detailed.  This  circumstance  and  the  importance  of  the 
principle  to  a  correct  understanding  of  many  parts  of  the 
com  question,  have  induced  me  to  hazard  this  publication 
before  the  meeting  of  parliament,  though  in  a  much  less  per- 
fect shape  than  I  think  it  would  have  assumed  had  I  been 
less  limited  in  point  of  time.  I  shall  first  proceed  to  prove 
this  principle,  and  shall  then  shew  some  of  the  consequences 
which  flow  from  it.  || 

The  principle  is  simply  this,  that  in  the  progress  of  the 
improvement  of  cultivation  the  raising  of  rude  produce 
becomes  progressively  more  expensive,  or,  in  other  words,  the 
ratio  of  the  net  produce  of  land  to  its  gross  produce  is  con- 
tinually diminishing. 

By  the  gross  produce  I  mean,  of  course,  the  whole  produce 
without  any  reference  to  the  expense  of  production;  by  the 
net  produce,  that  which  remains  of  the  gross  produce  after 
replacing  the  expense  of  production. 

In  the  progress  of  cultivation  both  the  gross  produce  and 
the  net  produce  must  be  constantly  increasing;  for  addi- 


10  SiK  Edwabd  West 

tional  expense  or  capital  would  not  be  laid  out  on  land, 
unless  it  would  reproduce  not  only  sufficient  to  replace  the 
capital  laid  out,  but  also  some  increase  or  profit  on  that  capi- 
tal, which  increase  or  profit  is  the  net  produce.     But  the  ^ 
proposition  is,  that  every  additional  quantity  of  capital  laid 
out  produces  a  less  proportionate  return,  and  consequently, 
the  larger  the  capital  expended,  the  less  the  ratio  of  the  profit  - 
to  that  capital.     Thus  suppose  any  quantity  of  land  such 
that  100?.  capital  laid  out  on  it  would  reproduce  120Z.  that 
is  20  per  cent,  profit,  I  say  that  a  double  capital  viz.  200L 
would  not  reproduce  240Z.  or  20  per  cent,  profit,  but  probably 
230?.   or  some  less  sum  than  ||  240?.     The   amount  of  the  - 
profit  would  no  doubt  be  increased,  but  the  ratio  of  it  to  the 
capital  would  be  diminished. 

It  is  a  fact  acknowledged  by  all  writers  on  political  econ- 
omy, that  in  the  progress  of  improvement  of  any  country,  the 
productive  powers  of  labour  in  agriculture  improve  less  rap- 
idly than  the  productive  powers  of  labour  in  manufactures; 
or  rather  to  express  the  same  proposition  more  accurately, 
the  productive  powers  of  labour  in  raising  rude  produce  im- 
prove less  rapidly  than  the  effective  powers  of  labour  in 
manufacturing  it.  This  phenomenon  has  hitherto  been  ac- 
counted for  solely  by  the  impossibility  of  carrying  the  sub- 
division of  labour,  and  the  consequent  introduction  of  ma- 
chinery, so  far  in  agriculture  as  in  manufactures.  '^  The 
nature  of  agriculture,"  says  the  author  of  the  Wealth  of 
Nations,  "  does  not  admit  of  so  many  subdivisions  of  labour, 
nor  of  so  complete  a  separation  of  one  business  from  another, 
as  manufactures.  It  is  impossible  to  separate  so  entirely  the 
business  of  the  grazier  from  that  of  the  com  farmer,  as  the 
trade  of  the  carpenter  is  commonly  separated  from  that  of 
the  smith.  The  spinner  is  almost  always  a  distinct  person 
from  the  weaver:  but  the  ploughman,  the  harrower,  the 
sower  of  the  seed,  and  the  reaper  of  the  ||  corn,  are  often  the 
same.  The  occasions  for  those  different  sorts  of  labour  re- 
turning with  the  different  seasons  of  the  year,  it  is  impossible 
that  one  man  should  be  constantly  employed  in  any  one  of 


The  Application  of  Capital  to  Land  11 

them.  This  impossibility  of  making  so  complete  and  entire  a 
separation  of  all  the  different  branches  of  labour  employed  in 
agriculture,  is  perhaps  the  reason  why  the  improvement  of  the 
productive  powers  of  labour  in  this  art,  does  not  always  keep 
pace  with  their  improvement  in  manufactures.  The  most  opu- 
lent nations,  indeed,  generally  excel  all  their  neighbours  in 
agriculture  as  well  as  manufactures;  but  they  are  commonly 
more  distinguished  by  their  superiority  in  the  latter  than  in 
the  former.  Their  lands  are  in  general  better  cultivated,  and 
having  more  labour  and  expense  bestowed  upon  them,  produce 
more  in  proportion  to  the  extent  and  natural  fertility  of  the 
ground.  But  this  superiority  of  produce  is  seldom  much  more 
than  in  proportion  to  the  superiority  of  labour  and  expense. 
In  agriculture,  the  labour  of  the  rich  country  is  not  always 
much  more  productive  than  that  of  the  poor,  or  at  least,  it  is 
never  so  much  more  productive  as  it  commonly  is  in  manufac- 
tures. The  com  of  the  rich  country,  therefore,  will  not 
always,  in  the  same  degree  of  goodness,  come  cheaper  to  mar- 
ket than  that  of  the  poor.  ||  The  com  of  Poland,  in  the  same 
degree  of  goodness,  is  as  cheap  as  that  of  France,  notwith- 
standing the  superior  opulence  and  improvement  of  the  latter 
country.  The  com  of  France  is,  in  the  com  provinces,  fully 
as  good,  and  in  most  years  nearly  about  the  same  price  with 
the  com  of  England:  though,  in  opulence  and  improvement, 
France  is  perhaps  inferior  to  England.  The  corn  lands  of 
England,  however,  are  better  cultivated  than  those  of  France, 
and  the  com  lands  of  France  are  said  to  be  much  better  culti- 
vated than  those  of  Poland.  But  though  the  poor  country, 
notwithstanding  the  inferiority  of  its  cultivation,  can,  in  some 
measure,  rival  the  rich  in  the  cheapness  and  goodness  of  its 
com,  it  can  pretend  to  no  such  competition  in  its  manufac- 
tures; at  least,  if  those  manufactures  suit  the  soil,  climate, 
and  situation  of  the  rich  country."  * 

The  impossibility  here  stated  of  increasing  so  much  in  agri- 
culture as  in  manufactures  by  the  division  of  labour,  and  by 

*  Smith's  Wealth  of  Nations,  Vol.  I.  B.  1.  c.  1.  p.  10,  11.=^ 


12  Sir  Edward  West 

machinery,  the  quantity  of  work  done  by  any  given  number  of 
hands,  would  indisputably  account  for  a  retardation  of  the 
improvement  of  the  former  when  compared  with  the  latter. 

6  But  this,  it  II  is  necessary  to  observe,  would  account  for  a 
comparative  retardation  only ;  for  the  effects  of  the  subdivision 
of  labour  and  the  application  of  machinery  are  considerable 
even  in  agriculture ;  and  would  greatly  improve  the  productive 
powers  of  labour  in  that  art  as  well  as  in  manufactures,  were 
it  not  for  another  principle,  which  has  escaped  the  attention  of 

,   Dr.  Smith,  and  which  has  a  positive  operation  in  checking  the 

^  improvement  of  those  powers  in  agriculture ;  which  principle 

may,  according  to  the  degree  in  which  it  acts,  either  merely 

retard,  or  altogether  stop,  such  improvement;  or  even  render 

the  powers  of  labour  actually  less  productive  as  cultivation 

J  advances. 

Dr.  Smithes  principle  is,  that  the  quantity  of  work  which 
can  be  done  by  the  same  number  of  hands,  increases  in  the 
progress  of  improvement  comparatively  less  rapidly  in  agri- 
culture than  in  manufactures.  The  additional  principle  to 
which  I  allude  is,  that  each  equal  additional  quantity  of  work 
bestowed  on  agriculture,  yields  an  actually  diminished  re- 

7  turn,*  II  and  of  course  if  each  equal  additional  quantity  of 
work  yields  an  actually  diminished  return,  the  whole  of  the 
work  bestowed  on  agriculture  in  the  progress  of  improvement, 
yields  an  actually  diminished  proportionate  return.  Whereas 
it  is  obvious  that  an  equal  quantity  of  work  will  always  fabri- 
cate the  same  quantity  of  manufactures. 

Lay  aside  for  a  moment  the  considerations  of  the  subdivision 
of  labour  and  machinery,  and  suppose  that  each  workman 
independently  could  do  as  much  work  as  each  in  association. 
In  such  a  state  of  things,  such  manufactures  as  were  made 

*  It  will  be  observed  that  in  this  reasoning  I  measure  the  pro- 
ductive powers  of  labour  by  the  effects  produced,  and  not  by  the 
quantity  of  work  done.  Thus  a  good  workman  will  do  more  work 
than  a  less  skilful  one;  but  if  the  work  of  the  latter  be  bestowed 
on  a  grateful  soil,  it  may  produce  a  greater  effect  than  the  work 
of  the  former  bestowed  on  an  inferior  soil. 


The  Application  of  Capital  to  Land  13 

would  be  constantly  in  the  progress  of  improvement,  made 
with  equal  labour,  and  the  increase  of  their  quantity  (suppos- 
ing the  price  of  rude  produce  to  be  given,)  would  be  exactly 
proportioned  to  the  labour  bestowed  in  fabricating  them.  A 
million  of  men  would  make  neither  more  nor  less  in  propor- 
tion to  their  number  than  one.  But  would  this  be  the  case 
in  agriculture  ?  Consider  the  case  of  a  new  colony ;  the  first 
occupiers  have  their  choice  of  the  land,  and  of  course  cultivate 
the  richest  spots  in  the  country:  the  next  comers  must  take 
the  second  in  quality,  which  will  return  less  to  their  labour, 
and  so  each  successive  additional  set  of  cultivators  must  ne-  || 
cessarily  produce  less  than  their  predecessors. 

Again,  look  to  the  history  of  agriculture,  from  its  first  rude 
beginning,  immediately  after  the  pastoral  stafe  when  almost 
the  whole  of  the  produce  was  still  spontaneous,  to  the  state  of 
perfection  at  which  it  has  arrived  in  this  country,  in  which 
the  njiode  of  culture  has  approximated  to  gardening. 

In  the  pastoral  state,  the  only  labour  of  the  tribe  is  that  of 
tending  their  cattle  and  driving  them  to  fresh  pastures  from 
those  which  they  have  exhausted ;  the  flocks  multiply  without 
trouble,  and  are  maintained  by  the  spontaneous  produce  of 
the  soil.  As  population  advances  it  is  necessary  to  have  re- 
course to  agriculture;  in  this  state  somewhat  more  labour  is 
necessary  to  support  even  the  same  number  of  mouths ;  but  yet 
it  is  at  first  small  if  compared  with  the  quantity  of  produce ; 
the  cultivators  till  successively  the  richest  spots,  which  yield 
profuse  returns  to  the  slight  cultivation  which  is  bestowed 
upon  them;  and  the  cattle  which  share  with  man  the  labours 
of  the  field,  wander  over  immense  tracts,  fed,  as  in  the  pastoral 
state,  by  the  spontaneous  productions  of  nature.  As  each  cul- 
tivator is  driven  into  a  narrower  compass  by  the  pressure  of 
population,  he  is  obliged  to  till  soils  which  are  comparatively  ||  9 
ungrateful  and  exhausted:  the  cattle  are  fed  on  artificial 
grasses;  and  expensive  manures  are  brought  from  a  distance 
to  enable  the  land  to  yield  successive  crops,  instead  of  being 
left,  when  exhausted,  as  in  the  earlier  stages  of  improvement, 
to  renovate  itself.     This  mode  of  proof,  however,  to  render  it 


y 


14  Sib  Edwabd  West 

complete,  would  require  more  space  than  the  limits  of  this 

essay  would  allow,  and  a  greater  accumulation  of  facts  than  I 

can  at  present  collect.     I  shall  therefore  attempt  a  briefer 

demonstration  of  the  principle. 

4^       The  additional  work  bestowed  upon  land  must  be  expended 

4.  either  in  bringing  fresh  land  into  cultivation,  or  in  cultivat- 

--)  ing  more  highly  that  already  in  tillage.     In  every  country 

the  gradations  between  the  richest  land  and  the  poorest,  must 

be  innumerable.     The  richest  land,  or  that  most  conveniently 

situated  for  a  market,  or,  in  a  word,  that  which,  on  account 

of  its  situation  and  quality  combined,  produces  the  largest 

return  to  the  expense  bestowed  on  it,  will  of  course  be  cul- 

10  tivated  first,*  and  when  in  the  progress  of  improve-  ||  ment 

new  land  is  brought  into  cultivation,  recourse  is  necessarily 

had  to  poor  land,  or  to  that  at  least  which  is  second  in  quality 

to  what  is  already  cultivated.     It  is  clear  that  the  additional 

work  bestowed  in  this  case  will  bring  a  less  return  than  the 

work  bestowed  before.     And  the  very  fact  that  in  the  progress 

of  society  new  land  is  brought  into  cultivation,  proves  that 

additional  work  cannot  be  bestowed  with  the  same  advantage 

as  before  on  the  old  land.     For  100  acres  of  the  rich  land 

will,  of  course,  yield  a  larger  return  to  the  work  of  10  men, 

than  100  acres  of  inferior  land  will  do,  and  if  this  same  rich 

land  would  continue  to  yield  the  same  proportionate  return 

to  the  work  of  20  and  30  and  100  as  it  did  to  that  of  10  labour- 

^    ers,  the  inferior  land  would  never  be  cultivated  at  all.     That 

this  diminution  of  the  return  of  the  soil  to  the  additional 

^   expense  bestowed  on  it  takes  place  gradually^  may  also  be 

proved  by  the  same  reasoning. 

The  gradations  of  the  quality  of  the  soil  must  be  infinite. 
Suppose  any  country  to  contain  one  million  acres  of  land, 

]  *  Many  various  circumstances,  arising  chiefly  from  the  artificial 
regulations  of  society,  will  doubtless  interfere  to  disturb  this  nat- 

4  ural  progress  of  things;  but  though  they  may  disturb  the  oper- 
ation of  the  principle,  a  very  little  consideration  will  show  that 

j^  they  cannot  completely  counteract  it;  and  that  even  these  dis- 
turbances very  often  compensate  each  other. 


The  Application  of  Capital  to  Land  15 

which  return  20  per  cent,  net  profit  to  a  certain  capital,  say 
ten  million  bestowed  on  it;  another  million  acres  which  re- 
turns but  19  per  cent,  or  suppose  a  farm  containing  10  acres, 
which  return  20  per  cent,  net  profit  to  lOOZ.  bestowed  on  it,  ||  n 
10  acres  which  return  19  per  cent,  to  the  same  capital,  and 
so  on,  as  in  the  following  table. 

Acres.  Capital.  Net  Profit. 
10                         100  20 

10  100  19 

10  100  18 

10  100  17,  &c. 

The  10  acres  returning  20  per  cent,  would  be  first  culti- 
vated, and  we  have  proved  that  the  same  10  acres  would  not 
return  20  per  cent,  on  each  successive  100?.  bestowed  on  it; 
for  if  it  did,  as  I  have  shewn,  no  part  of  the  other  land  would 
ever  be  cultivated.  But  should  the  additional  capital  be- 
stowed on  the  first  10  acres  produce  less  than  19  per  cent, 
the  capital  would  not  be  bestowed  on  the  first  10  acres  but 
on  the  second  10  acres.  Or,  in  short,  generally,  if  the  best 
land  already  in  cultivation  would  not  return  so  much  to  the 
additional  capital  as  to  the  capital  already  bestowed  on  it,  by 
any  great  difference,  such  additional  capital  would  not  be 
expended  on  the  best  land,  but  on  that  next  in  quality  to  the  -. 
best,  and  which,  from  the  infinite  number  of  gradations  of 
the  quality  of  the  soil,  must  be  removed  at  the  least  possible 
distance  from  the  best. 

It  appears,  therefore,  that  in  the  progress  of  fl  improvement  13 
an  equal  quantity  of  work  extracts  from  the  soil  a  gradually 
diminishing  return;  and  that,  therefore,  the  whole  quantity 
of  work  bestowed  on  land  in  the  progress  of  improvement, 
extracts  from  the  soil  a  gradually  diminishing  proportionate  v 
return.  vBut  the  quantity  of  work  which  can  be  done  by  asf 
given  number  of  hands  is  increased  in  the  progress  of  im-  y 
provement,  by  means  of  the  subdivision  of  labour  and  machin-    , 
ery  even  in  agriculture.^   Such  increase  then  of  the  quantity 
of  work  which  can  be  performed  by  the  same  number  of 


i 


16  SiK  Edwakd  West 

hands  in  agriculture,  may  either  more  than  compensate,  or 
just  compensate,  or  fall  short  of  compensating  the  diminu- 
tion of  the  return  of  the  same  quantity  of  work.  In  the  first 
of  which  cases  labour  in  agriculture  would  become  absolutely 
more  productive;  in  the  second  would  remain  always  equally 
productive;  in  the  last  would  become  absolutely  less  pro- 
ductive. Thus  say  in  any  given  stage  of  improvement  ten 
hands  will  perform  the  same  quantity  of  work  as  twenty 
would  have  performed  at  any  given  anterior  period.  Now  if 
this  same  quantity  of  work  will  extract  from  the  soil  in  the 
later  period  more  than  half  what  it  would  have  extracted  in 
the  earlier,  the  same  number  of  hands  will  produce  more  in 

13  the  latter  than  in  the  former  ||  period ;  and  labour  in  agricul- 
ture will,  of  course,  have  become  absolutely  more  productive : 
if  the  same  quantity  of  work  will  extract  just  half  in  the 
latter  period  of  what  it  did  in  the  former,  labour  will  be 
equally  productive;  if  less  than  half  it  will  have  become 
absolutely  less  productive.  Now  that  neither  of  the  two  first 
suppositions  can  be  the  fact  will  be  clear  from  a  moment's 
consideration.  If  either  of  them  were  the  fact,  as  we  know 
that  Jabour  becomes  actually  more  productive  in  manufac- 
tures, the  wealth  and  stock  of  the  community  in  the  progress 
of  improvement  and  population  would  go  on,  not  only  in- 
creasing, but  increasing  in  a  rapidly  accelerated  ratio.  The 
reproduction  of  the  country  would  not  only  each  year  be 
larger  in  amount  than  in  the  preceding  year,  but  the  ratio  of 
that  reproduction  to  the  capital  would  each  year  be  greater. 

X  Population  would  double  with  more  ease  in  such  a  country  in 
jf  twenty-five  years  than  it  does  in  America  in  the  same  period ; 
^  and  an  acre  of  land  would,  in  a  subsequent  stage  of  improve- 
^  ment,  more  easily  maintain  a  thousand,  or  any  number  of 
labourers,  however  great,  than  it  could  one  in  a  former  stage. 
-tt        But  let  us,  notwithstanding,  suppose  that  the  first  of  these 

14  three  hypotheses  were  the  ||  fact,  namely,  that  labour  in  agri- 
culture becomes  in  the  progress  of  improvement  absolutely 
more  productive;  and  let  us  consider  more  minutely  what 
would  be  the  immediate  consequence  of  such  a  state  of  things. 


The  Application  of  Capital  to  Land  17 

and  as  labour  in  manufactures  we  have  already  seen,  becomes 
in  the  progress  of  improvement  more  productive,  let  us  sup- 
pose the  effective  powers  of  labour  in  all  employments,  both 
in  raising  rude  produce  and  in  manufacturing  it  to  be  ^ 
doubled.  It  is  obvious  that  the  profits  of  stock  would,  in  this 
case,  be  doubled;  even  allowing  the  wages  of  labour  to  be 
doubled  at  the  same  time;  for  by  the  productive  powers  of 
labour  being  doubled  the  net  produce  of  labour  would  be 
doubled  as  well  as  the  gross  produce.  There  would  be  just 
twice  as  much  of  every  article  both  of  rude  produce  and 
manufactures  as  before.  And,  though  no  article  would  ex- 
change for  more  of  any  other  than  before,  yet,  as  every 
person  in  the  community  would  haVe  twice  as  much  of  the 
particular  article  in  which  he  might  deal,  his  command  over 
every  article  would  be  doubled.  If  there  were  only  the  same 
quantity  of  money  in  the  country  as  before,  things  would  fall 
to  half  their  money  price,  and  neither  the  money  profits  of  - 
stock  nor  the  money  wages  of  labour  would  at  first  be  in- 
creased, II  but  by  the  favourable  exchange,  which  such  increased  15 
cheapness  of  commodities  would  produce,  bullion  would  be 
imported  till  there  were  money  enough  to  circulate  the  in- 
creased quantity  of  articles,  and  the  wages  of  labour,  and: 
profits  of  stock,  would  then  be  increased  in  their  money  value 
as  well  as  their  real  value. 

But  next  let  us  suppose  a  case  in  which  the  powers  of 
labour  remain  equally  productive  in  agriculture,  having  be- 
come doubly  effective  in  manufactures.  Every  article  of 
manufactures  is  now  reduced  one-half  in  price  compared  with 
rude  produce,  but  bears  the  same  ratio  towards  all  the  rest 
of  manufactures  as  before,  and  consequently  exchanges  for 
neither  more  nor  less  of  such  manufactures  than  before.  But 
every  manufacturing  capitalist  having  doubled  the  production 
of  the  particular  article  in  which  he  deals,  has  double  the 
command  over  all  manufactures,  and  the  same  command 
over  rude  produce  that  he  had  before.  His  real  profit  is 
therefore  increased.  The  agriculturist  has  also  double  the 
command  of  aU  manufactures  that  he  had  before,  and  the 


18  Sir  Edward  West 

same  command  of  rude  produce.  The  real  profits  therefore 
of  all  capital  are  increased,  and  this  would  be  followed  as 
before  by  an  increase  in  the  money  profits. 

16  The  same  reasoning  would  apply  of  course  ||  to  the  above 
cases,  if  the  effective  powers  of  labour  were  increased  in  any 
less  degree  than  I  have  supposed,  though  the  increase  of  profit 
would  not  of  course  be  so  great.  The  difference  would  be 
merely  in  degree,  not  in  principle.  It  follows  therefore  that 
if  the  powers  of  labour  in  agriculture  were  either  to  advance 
ior  remain  stationary,  the  profits  of  stock  must  constantly  rise 
in  the  progress  of  improvement. 

But  suppose  thirdly,  that  the  productive  powers  of  labour 
decrease  in  agriculture,  whilst  they  increase  in  manufactures ; 
and  say  the  habits  and  wants  of  the  society  and  the  powers 
of  labour  are  such,  that  half  of  the  capital  of  the  country  is 
employed  in  agriculture  and  half  in  manufactures. 

And  first  suppose  that  whilst  the  powers  of  labour  double 
in  manufactures,  those  powers  become  less  productive  by  half 
in  agriculture: — ^the  manufacturing  capitalist  would  now 
have  double  the  command  that  he  had  before  over  manufac- 
tures; but  only  half  the  command  that  he  had  before  over 
rude  produce:  and  therefore  on  the  whole  he  would  have  no 
additional  command  over  the  aggregate  of  commodities,  and 
his  profit  would  remain  the  same  as  before.  The  same  would 
be  the  case  also  with  the  agriculturist.     If  this  supposition 

17  then  were  ||  the  fact,  the  profits  of  stock  would  always  con- 
tinue the  same  in  the  progress  of  improvement. 

And  without  tracing  the  same  process  again,  it  is  evident 
that  if  the  decrease  of  the  powers  of  labour  in  agriculture 
should  be  greater  than  the  increase  of  those  powers  in  manu- 
factures, the  profits  of  stock  must  diminish.  But  to  consider 
the  case  of  a  diminution  of  the  powers  of  labour  in  agricul- 
ture, accompanying  an  increase  of  those  powers  in  manufac- 
tures in  a  different  light : — Suppose  that  the  habits  and  wants 
of  the  people  of  any  country  are  such  in  any  given  state  of 
the  productive  powers  of  labour,  that  half  their  capital  is 
employed  in  agriculture  and  half  in  manufactures.     Suppose 


The  Application  of  Capital  to  Land  19 

then  that  in  the  progress  of  improvement  the  capital  in  manu- 
factures becomes  more  productive,  the  capital  in  agriculture 
less  so.  If  the  capital  which  can  now  be  spared  from  manu- 
factures on  account  of  the  increase  of  the  effective  powers  in 
them,  will  raise  as  much  rude  produce  as  to  compensate  for 
the  diminution  of  the  productive  powers  in  agriculture,  the 
profits  of  the  stock  of  the  society  will  remain  the  same  as 
before.  But  if  the  spare  manufacturing  capital  will  not 
compensate  the  defective  powers  of  production  in  agriculture, 
the  profits  of  the  stock  of  the  society  must  diminish.  But 
which  of  these  conclusions  is  ||  really  the  fact  ?  Do  the  profits  is 
of  stock  increase,  remain  stationary,  or  decrease  in  the 
progress  of  improvement? 

It  is  an  acknowledged  fact  that  the  profits  of  stock  are 
always  lower  in  a  rich  than  in  a  poor  country ;  and  that  they 
gradually  fall  as  a  nation  becomes  more  wealthy.  This  is 
evidenced  as  well  by  our  own  history  as  by  that  of  every  other 
country,  in  which  the  state  and  progress  of  commercial  capi- 
tal have  been  observed. — (See  Wealth  of  Nations,  Book  I. 
c.  9.)  It  follows  therefore  that  labour  cannot  be  always 
equally  productive  in  agriculture  in  the  progress  of  improve- 
ment; and,  a  fortiori,  that  the  productive  powers  of  labour 
cannot  increase,  but  that  they  must  become  gradually  less 
productive  in  the  progress  of  improvement.  And  not  only 
less  productive,  but  so  much  less  productive  that  the  con- 
tinual increase  of  the  effective  powers  of  labour  in  manufac- 
tures does  not  compensate  for  their  continued  diminution  in 
agriculture.  For  if  it  were  not  so,  the  profits  of  stock  would, 
as  I  have  just  proved,  become  continually  higher  in  the 
progress  of  improvement.  In  the  above  argument  I  have 
supposed  the  wages  of  labour  to  vary  with  the  productive 
powers  of  that  labour ;  that  is,  that  the  more  labour  produces 
the  better  it  will  be  paid.  That  this  is  nearly  the  ||  case,  I  19 
shall  prove  presently ;  but  it  will  be  sufficient  for  the  present 
to  shew  that  it  is  impossible  wholly  to  account  for  the  pro- 
gressive diminution  of  the  profits  of  stock  by  any  increase  of 
the  wages  of  labour.     And  for  this  purpose  I  shall  briefly 


20  Sir  Edward  West 

recapitulate  the  above  argument.  It  is  a  known  fact,  as  I 
have  stated,  that  the  profits  of  stock  diminish  in  the  progress 
of  wealth  and  improvement,  but  the  profits  of  stock  are  the 
net  reproduction  of  stock,  which  can  b^  diminished  in  two 
ways  only,  namely,  either  by  a  diminution  of  the  powers  of 
production,  or  by  an  increase  of  the  expense  of  maintaining 
those  powers,  that  is,  by  an  increase  of  the  real  wages  of 
labour.  That  the  real  wages  of  labour  cannot  increase  so  as  to 
account  for  this  diminution  of  the  net  reproduction,  is  clear 
from  this,  that  if  it  were  so,  the  real  wages  of  labour  would  be 
constantly  and  greatly  increasing  in  the  progress  of  wealth  and 
improvement;  and  population  would  consequently  increase 
more  and  more  rapidly  in  the  progress  of  improvement,  the 
contrary  of  which  we  know  to  be  the  fact. 

As  therefore  the  diminution  of  the  net  reproduction  is  not 
wholly,  at  least,  caused  by  the  increasing  wages  of  labour, 
that  is,  the  expence  of  maintaining  the  productive  powers ;  it 
20  must  be  caused  partly,  at  least,  by  a  dimi-  ||  nution  of  those 
powers.  But  the  productive  powers  in  manufactures,  as  has 
been  shewn,  are  constantly  increasing,  and  the  diminution  of 
the  net  reproduction  or  'the  profits  of  stock  must  therefore 
necessarily  be  caused  by  a  diminution  of  the  productive  pow- 
ers in  agriculture.  But  though  it  appears  to  me  to  be  self- 
evident  that  the  profits  of  stock  or  the  net  reproduction  of 
stock  cannot  be  diminished  by  any  other  means  than  the  two 
I  have  mentioned,  namely,  an  increased  expence  of  maintain- 
ing the  productive  powers,  and  a  diminution  of  those  powers, 
yet  it  may  be  right  to  notice  that  Dr.  Smith  has  attributed 
the  fact  of  the  gradual  diminution  of  the  profits  of  stock  to 
a  very  different  cause. 

''The  increase,^'  says  Dr.  Smith,  "of  stock  which  raises 
wages  tends  to  lower  profit.  When  the  stocks  of  many  rich 
merchants  are  turned  into  the  same  trade,  their  mutual  com- 
petition naturally  tends  to  lower  its  profit,  and  when  there  is 
a  like  increase  of  stock  in  all  the  different  trades  carried  on 
in  the  same  society,  the  same  competition  must  produce  the 
same  effect  in  them  all."    Book  I.  c.  viii.'  p.  133. 


The  Application  of  Capital  to  Land  21 

Smith  therefore  attributes  this  decline  in  the  rate  of  profit 
to  increased  competition.  But  the  slightest  consideration 
will  detect  the  fallacy  of  this  opinion.  If  the  capital  em- 
ployed II  in  one  branch  of  trade  alone  be  increased,  doubtless  21 
the  increased  competition  of  the  dealers  in  that  branch  will 
lower  the  price  of  their  articles,  and  consequently  the  profits 
of  those  dealers.  But  why  is  the  price  lowered  except  because  - 
that  article  is  now  more  abundant  than  others,  and  could  not 
be  sold  without  such  diminution  of  price.  But  if  the  capital 
in  all  the  different  branches  of  trade,  and  consequently  the 
quantity  of  all  the  articles  of  those  respective  trades  be  in- 
creased in  the  same  degree,  the  same  ratio  between  each  and 
all  the  rest  remains,  and  each  article  must  sell  for  the  same 
real  price  as  it  fetched  before.  If  the  competition  be  in- 
creased in  any  one  article,  it  for  the  same  reason  is  increased 
in  all;  and  as  it  exists  in  the  same  degree  in  each,  it  cannot 
alter  the  real  price  of  any  one.  It  is  only  the  relative  altera- 
tion of  the  demand  and  supply  which  can  increase  the  price, 
and  here  there  is  no  such  alteration. 

The  money  price  of  all  articles  would  no  doubt  be  dimin- 
ished, and  therefore  the  money-profits  of  stock;  but  this 
would  not  lower  the  real  price  of  those  articles,  nor  the  real 
profits ;  even  the  money  price  would  soon  be  raised  to  a  level 
with  the  real  price,  by  a  favourable  balance  of  trade  and  the 
consequent  introduction  of  bullion.  Still,  however,  it  may 
be  said  as  ||  before,  that  such  competition  may  lower  the  profits  22 
by  an  increased  demand  for  workmen,  and  a  consequent  rise 
of  wages. 

We  return  then  to  the  old  question,  whether  the  diminution  ,, 
of  the  proiits  of  stock  in  the  progress  of  improvement  can  be 
caused  by  the  increase  of  the  wages  of  labour.  Now,  l&t.  If 
such  were  the  fact,  how  comes  it  that  both  the  wages  of  labour 
and  profits  of  stock  are  high  at  the  same  moment  in  America. 
The  wages  of  labour  being  higher  in  America  than  in  this 
country,  if  the  rise  of  the  wages  of  labour  were  the  only  rea- 
son of  the  diminution  of  the  profits  of  stock,  the  profits  of 


22  Sib  Edwabd  West 

stock  in  America  should  be  lower  than  they  are  here.    But 
we  know  that  they  are  much  higher. 

To  enter  a  little  more  particularly  into  the  subject  of  the 
wages  of  labour,  they,  like  the  price  of  every  thing  else,  must 
depend  on  the  supply  and  demand.  The  supply  of  course 
depends  on  the  amount  of  the  population;  the  demand  de- 
pends, as  Dr.  Smith  states,  on  the  amount  of  the  stock  of  the 

23  country.*  If  then  ||  the  stock  increase  faster  than  the  popu- 
lation, the  demand  increases  faster  than  the  supply,  and 
wages  must  rise ;  if  the  stock  and  population  increase  equally, 
wages  will  remain  stationary;  and  if  population  increase 
more  rapidly  than  the  stock,  wages  must  fall. 

It  is  not  the  amount  then  of  the  stock  of  a  country  which 
causes  high  wages  ;t*  for  if  the  stock  of  a  country  be  station- 
ary, whatever  be  its  amount,  population  will  soon  increase  up 
to  the  most  scanty  subsistence  which  such  stock  can  afford. 
Other  circumstances  beside  the  amount  of  stock  may,  no 
doubt,  influence  the  wages  of  labour ;  but  I  am  now  consider- 
ing merely  what  effect  the  quantity  of  stock  may  have  on  the 
wages  of  labour;  and  other  circumstances  must  of  course  be 
excluded  from  consideration,  or  taken  in  mathematical  lan- 
guage to  be  given. 

Nor  is  it  the  greatness  of  the  increase  alone  of  stock  which 
causes  high  wages,  but  it  is  the  greatness  of  the  ratio  of  the 
increase. 

Thus  suppose  a  country  with  100  millions  increasing  its 
stock  annually  to  the  amount  of  a  million,  the  increase  would 
be  as  1  to  100 ;  and  the  increase  of  the  wages  of  labour  would 

24  be  but  T^.  II 

*  The  demand  of  those  who  live  by  wages  necessarily  increases 
with  the  increase  of  the  revenue  and  stock  of  every  country,  and 
cannot  possibly  increase  without  it.  The  increase  of  revenue  and 
stock  is  the  increase  of  national  wealth.  The  demand  for  those 
who  live  by  wages  therefore  naturally  increases  with  the  in- 
crease of  national  wealth,  and  cannot  possibly  increase  without 
it.    B.  1.  c.  8. 

t  W.  of  Nations,    B.  1.  c.  8. 


The  Application  of  Capital  to  Land  23 

But  suppose  a  country  with  stock  amounting  to  10  millions, 
and  an  annual  increase  of  half  a  million,  though  the  actual 
increase  of  stock  would  be  smaller  than  in  the  last  case,  the 
increase  in  the  wages  of  labour  would  be  a  half -tenth  or  one- 
twentieth.  But  it  must  be  observed,  that  supposing  a  coun- 
try to  be  always  equally  parsimonious,  it  is  upon  the  rate  of 
profit  that  the  rate  of  the  increase  of  its  stock  depends:  for 
the  profits  of  stock  are,  as  I  have  before  mentioned,  the  net 
reproduction  of  stock,  and  the  greater  therefore  the  profits 
of  stock,  if  the  country  be  equally  parsimonious,  the  greater 
the  rate  of  the  increase  of  stock. 

And  it  follows  that  in  such  a  country  the  greater  the  profits 
of  stock,  the  higher  will  be  the  wages  of  labour,  and  vice  versa. 

That  the  demand  for  labour  would  be  greatest  when  most 
could  be  made  of  it,  that  is,  when  the  profits  of  stock  were  high, 
and  least  when  those  profits  were  low,  appears  too  plain  to 
have  required  proving,  and  I  should  not  have  dwelt  on  this 
subject  had  not  Dr.  Smith,  in  spite  of  his  clear  statement  of 
the  subject  of  wages  in  the  8th  chapter,  seemed  to  maintain 
an  opposite  opinion.  "  The  rise  and  fall  in  the  profits  of 
stock,^'  says  Dr.  Smith,  "  depend  on  the  same  causes  with  the 
rise  and  fall  in  the  wages  of  labour,  the  increasing  or  ||  de-  25 
dining  state  of  the  wealth  of  the  society,  but  those  causes 
effect  the  one  and  the  other  very  differently.  The  increase  of 
stock  which  raises  wages  tends  to  lower  profit." — Book  I. 
c.  9.  p.  133.  Dr.  Smith  seems  therefore,  here  to  think  that 
the  profits  of  stock  and  wages  of  labour  vary  inversely  as  each 
other,  the  contrary  of  which  I  think  I  have  proved  to  be  the 
fact. 

I  will  now  recapitulate  shortly  the  whole  of  the  above  argu- 
ments. 

The  division  of  labour  and  application  of  machinery  render 
labour  more  and  more  productive  in  manufactures,  in  the 
progress  of  improvement;  the  same  causes  tend  also  to  make 
labour  more  and  more  productive  in  agriculture  in  the  pro-r 
gress  of  improvement.  But  another  cause,  namely,  the  neces- 
sity of  having  recourse  to  land  inferior  to  that  already  in 


24  SiK  Edwaed  West 

tillage,  or  of  cultivating  the  same  land  more  expensively, 
tends  to  make  labour  in  agriculture  less  productive  in  the 
progress  of  improvement.  And  the  latter  cause  more  than 
counteracts  the  effects  of  machinery  and  the  division  of  labour 
in  agriculture;  because,  otherwise  agricultural  labour  would 
either  become  more  productive,  or  remain  equally  productive, 
in  the  progress  of  improvement. 

26  In  either  of  which  cases,  since  labour  in  ||  manufactures 
becomes  more  productive,  all  labour  would  become  more  pro- 
ductive, and  the  profits  of  stock,  which  are  the  net  reproduc- 
tion, would,  of  course,  rise  in  the  progress  of  improvement. 
But  the  profits  of  stock  are  known  to  fall  in  the  progress  of 
improvement,  and,  therefore,  neither  of  the  two  first  suppo- 
sitions is  the  fact,  and  labour  in  agriculture  must,  in  the 
progress  of  improvement,  become  actually  less  productive.  It 
is  then  shewn  that  this  effect  cannot  be  produced  by  a  rise  in 
the  real  wages  of  labour. 

The  powers  of  labour  therefore,  in  agriculture,  becoming 
less  productive,  and  the  diminished  expense  of  maintaining 
those  powers  not  compensating  such  decreased  productiveness, 
which  appears  from  the  progressive  fall  of  the  profits  of  stock, 
the  whole  produce  of  land,  and  consequently  the  net  produce, 
must  diminish  in  proportion  to  the  expense  of  production; 
and  the  ratio  of  the  net  produce  to  the  gross  must  diminish 
in  the  progress  of  improvement. 

I  have  endeavoured,  therefore,  to  prove  the  principle  which 
it  was  my  object  to  prove  theoretically,  and  to  account  for  it 
as  I  proceeded  in  the  proof.  But  I  need  not  this  reasoning 
for  the  purpose  of  substantiating  the  fact,  that  the  ratio  of 

27  the  net  produce  to  the  ||  gross  produce  of  land  gradually 
diminishes  in  the  progress  of  improvement. 

Smith  has  stated,  and  certainly  correctly,  that  the  natural 
rent  of  land  is  always  that  part  of  the  net  produce  of  land 
which  remains  after  payment  of  the  common  profits  of  stock 
on  the  tenant's  capital. — Book  I.  c.  11.  p.  223. 

If  then  the  ratio  of  the  rent  of  land  to  the  tenant's  capital 
be  gradually  diminishing  in  the  progress  of  improvement,  the 


The  Application  of  Capital  to  Land  25 

profits  of  stock  remaining  the  same,  the  ratio  of  the  net  pro- 
duce to  the  capital,  and  consequently  to  the  gross  produce  of 
land,  must  also  be  gradually  diminishing  in  the  progress  of 
improvement.  A  fortiori  must  this  follow,  if,  as  it  has  been 
stated,  the  profits  of  stock  also  gradually  diminish  in  the 
progress  of  improvement. 

Now  it  is  a  commonly  observed  fact,  and  one  which  appears 
in  almost  every  page  of  the  Eeports  of  the  corn  committees, 
that  the  ratio  of  the  rent  to  the  gross  produce  is  much  less 
at  the  present  moment  in  this  country  than  it  was  twenty 
years  ago,  that  where  twenty  years  ago  rent  was  one-third  of 
the  gross  produce,  it  is  now  one-fifth,  or  between  one-fourth 
and  one-fifth.  This,  it  may  be  said,  is  attributable  to  the 
increased  burthens  on  the  land,  to  the  poor  rates  and  taxes. 
It  is  certainly  possible  ||  that  this  may  have  had  some  effect  38 
in  producing  this  alteration  of  ratio  between  the  rent  and 
gross  produce.  However  be  this  as  it  may,  the  witnesses  who 
speak  to  this  fact  of  the  ratio  of  the  rent  to  the  gross  produce 
having  declined,  attribute  it  expressly  to  the  more  expensive 
mode  of  cultivation  now  adopted  in  order  to  increase  the 
produce,  and  not  to  the  taxes  or  rates.  Thus  in  p.  41,  of  the 
Lords'  Eeport,  the  witness  says,  that,  ^^  where  estates  are  in  a 
very  high  cultivation,  the  share  of  the  gross  produce  obtained 
as  rent  by  the  landlord  is  less  than  where  estates  are  more 
imperfectly  cultivated.^'  And  this  is  the  language  of  *  all 
the  witnesses  before  the  corn  committees;  they  are  unani- 
mous in  their  opinion  that  where  lands  are  in  a  high  state  of 
cultivation  the  rent  bears  a  less  ratio  to  the  gross  produce 
than  where  they  are  less  expensively  tilled. 

Dr.  Smith  seems  in  one  passage  to  have  been  aware  of  this 
fact  of  the  diminution  of  the  ratio  of  the  rent  to  the  gross 
produce  in  the  progress  of  improvement. 

"In  the  present  state  of  Europe,''  says  he,  "the  share  of 

*  See  p.  41.  57.  63.  94.  103.  130  of  the  Lords'  Reports.— In  p.  44. 
79.  92.  99.  111.  121.  133.  154.  203  of  the  Commons'  Reports,  A.  D. 
1814.» 


26  Sir  Edward  West 

the  landlord  seldom  exceeds  a  ||  third,  sometimes  not  a 
fourth  part  of  the  whole  produce  of  the  land.  The  rent  of 
land,  however,  in  all  the  improved  parts  of  the  country  has 
been  tripled  and  quadrupled  since  those  ancient  times,  and 
this  third  or  fourth  part  of  the  annual  produce  is,  it  seems, 
three  or  four  times  greater  than  the  whole  had  been  before. 
In  the  progress  of  improvement,  rent,  though  it  increases 
in  proportion  to  the  extent,  diminishes  in  proportion  to  the 
produce  of  the  land/*     (See  Smith,  vol.  ii.  p.  8.  b.  2.  c.  3.) 

It  is  singular  that  after  this  distinct  enunciation  of  the 
fact  of  the  diminution  of  the  rent  in  proportion  to  the  gross 
produce,  that  the  author  of  the  Wealth  of  Nations  should 
not  only  not  have  seen  the  conclusion  to  which  this  leads  by 
a  mere  arithmetical  operation,  viz.  that  of  the  diminution  of 
the  net  produce  of  land  to  the  gross  produce,  but  that  in 
other  parts  of  his  work  he  should  even  lose  sight  of  this  fact 
of  the  diminution  of  the  ratio  of  the  rent  to  the  gross  produce 
of  land.  "  The  extension  of  improvement  and  cultivation," 
says  Dr.  Smith  in  one  passage,  "  tends  to  raise  rent  directly. 
The  landlord's  share  of  the  produce  necessarily  increases 
with  the  increase  of  the  produce.  That  rise  in  the  real  price 
of  those  parts  of  the  rude  produce  of  land,  which  is  ||  first 
the  effect  of  extended  improvement  and  cultivation,  and 
afterwards  the  cause  of  their  being  still  further  extended; 
the  rise  in  the  price  of  cattle,  for  example,  tends  too  to  raise 
the  rent  of  land  directly,  and  in  a  still  greater  proportion. 
The  real  value  of  the  landlord's  share,  his  real  command  of 
the  labour  of  other  people,  not  only  rises  with  the  real  value 
of  the  produce,  but  the  proportion  of  his  share  to  the  whole 
produce  rises  with  it/*     (Smith,  vol.  i.  p.  392.  b.  1.  c.  11.) 

And  the  11th  chapter  of  the  first  book  abounds  with  pas- 
sages in  which  the  fact  that  the  ratio  of  the  rent  of  land  to 
the  gross  produce  diminishes  in  the  progress  of  improvement, 
is  overlooked. 

I  have,  therefore,  attempted  to  prove  as  well  theoretically 
as  by  the  evidence  of  practical  men,  that  the  ratio  of  the  net 
produce  of  land  to  its  gross  produce  diminishes  in  the  progress 


The  Application  of  Capital  to  Land  27 

of  improvement.  I  could  adduce  a  variety  of  facts  in  cor- 
roboration of  my  proof  had  I  leisure  to  go  into  them.  There 
is  one,  however,  which  seems  to  me  so  unequivocal  a  test  of 
my  principle,  that  I  shall  just  mention  without  entering  into 
the  discussion  of  it.  It  is  the  progressive  rise  of  the  value  of 
tithes  as  compared  with  rent. 


31 


I  shall  now  apply  this  principle  to  a  consideration  of  the 
question  of  the  policy  of  restricting,  or  totally  prohibiting,  in 
the  present  circumstances  of  this  country,  the  importation  of 
foreign  corn;  and  shall  first  briefly  sketch  some  of  the  con- 
sequences of  such  restriction  or  total  prohibition,  and  then 
point  out  a  few  of  the  probable  effects  of  a  free  importation. 
One  of  the  consequences  of  a  total  prohibition  of  importation 
would  be  that  the  average  price  of  corn  would  presently  rise 
to  its  growing,  or  natural  price,  supposing  corn  to  be  now 
below  that  price,  and  afterwards  the  average  price  would 
progressively  increase,  and  the  nearer  any  restriction  ap- 
proaches to  prohibition,  the  more  nearly  will  the  effect  of 
such  restriction  resemble  that  of  a  total  prohibition.  Take 
905.  the  quarter  to  be  the  growing  price  in  this  country  of  a 
crop  of  wheat  sufficient  for  our  present  population,  if  impor- 
tation were  totally  prohibited  the  average  price  of  wheat 
would  presently  rise  to  90s.  the  quarter.  So  if  by  any  system 
of  regulations  the  importation  of  foreign  wheat  were  directly 
or  virtually  prohibited,  till  wheat  in  our  own  market  had 
reached  the  price  of  8O5.  the  quarter,  the  average  price  of 
wheat  would  presently  rise  to  8O5. ;  and  80s.  would  be  the 
minimum  of  price  at  which  wheat  could  be  sold  in  our  mar- 
ket, for  any  continuance.  ||  33 

The  following  reasons  induce  me  to  think  that  90s.  the 
quarter  may  be  about  the  growing  price  of  a  crop  of  wheat 
raised  at  home,  sufficient  for  our  present  supply.  It  appears 
from  the  documents  given  in  the  reports  of  the  corn  commit- 
tees, that  in  the  years  1811  and  1812  our  home  growth  was 
about  adequate  to  our  consumption. 


28  Sir  Edward  West 

According  to  Sir  H.  PamelFs  statement,  which  I  have 
compared  with  these  documents,  and  believe  to  be  accurate, 
"the  value  of  com  exported  in  1811  from  the  united  king- 
dom to  foreign  countries,  was  1,379,714Z. — The  value  of  for- 
eign corn  imported  was  1,092,804Z.  leaving  a  balance  of  ex- 
ported com  of  286,910?.  In  1812  the  value  of  corn  exported 
from  the  united  kingdom  to  foreign  countries  was  1,498,229Z. : 
the  value  of  foreign  com  imported  was  1,213,850L  leaving  a 
balance  of  exported  corn  of  284,379Z.  In  consequence  of  the 
fire  at  the  Custom-House  the  value  of  com  exported  from 
Great  Britain  in  1813  to  foreign  countries  cannot  be  ascer- 
tained/' *  In  the  years  1811  and  1812,  therefore,  we  grew 
rather  more  com  than  sufficient  for  our  own  supply;  but 
when  it  is  considered  that  from  Ireland  alone,  grain  to  the 
33  value  of  598,325?.  in  1811,  and  to  the  ||  value  of  662,823?.  in 
1812,  was  exported  to  Spain  and  Portugal,  a  great  portion 
of  which  was  of  course  for  the  maintenance  of  our  own  troops, 
who  must  now  be  fed  at  home,  it  will  be  fair,  perhaps,  to  con- 
sider that  in  those  years  we  about  supported  our  population. 

It  appears  from  the  same  documents  that  the  actual  price 
of  wheat  in  the  year  1811  was  945.  6d.  the  quarter;  in  1812, 
1255.  5dt 

The  actual  price  is  not  of  course  a  sure  criterion  of  the 
growing  price,  unless  it  be  taken  on  an  average  of  some 
length.  But  considering  that  the  price  of  wheat  in  this 
country  was  in 

s.    d. 

1810  -    -     106  0  the  quarter. 

1811  -    -       94  6 

1812  -    -     125  5 
and  in  1813     -    -     120  0 

though  we  make  every  allowance  for  the  extension  of  the 
present  improved  system  of  husbandry  into   Ireland,   and 

*  P.  12  of  Sir  H.  Parnell's  pamphlet.' 

t  See  1st  Commons  Reports,  App.  No.  1,  p.  28.  The  Windsor 
prices  of  the  four  first  years  are  higher  than  those  above  stated. 


The  Application  of  Capital  to  Land  29 

those  parts  of  this  country  into  which  it  has  not  yet  penetrated, 
it  is  impossible  to  take  the  growing  price  of  a  crop  of  wheat 
sufficient  for  our  own  supply  at  less  than  905.  the  quarter,  in 
the  present  state  ||  of  the  currency.     And  of  course  it  cannot-^  84 
fall  permanently  below  its  growing  price,  for  otherwise  it^ 
would  not  remunerate  the  grower,  and  the  same  quantity  ^ 
would  not  continue  to  be  produced.     But  to  make  provision  ^ 
for  an  increasing  population,  it  will  be  necessary  to  increase    "^ 
the  produce,  and  this  increased  produce  will,  as  I  have  shown,    ., 
be  raised  at  a  greater  proportionate  expense;  or  in  other 
words,  the  growing  price  will  progressively  increase.     Such 
would  be  the  consequence  of  a  total  prohibition  of  importa- 
tion; and  the  same  reasoning  proves  that  if  the  importation    " 
of  foreign  wheat  were  permitted  only  whilst  our  own  wheat    "^ 
were  above  for  instance  8O5.  the  quarter,  the  average  price    ' 
of  wheat  in  our  markets  would  never  fall  below  SOs.  the  quar- 
ter.    For  it  is  the  competition  of  the  foreigner  alone  which 
could  keep  down  wheat  even  to  SOs.  and  when  that  compe- 
tition were  withdrawn,  as  it  must  be  as  soon  as  the  price  fell   "" 
below  SOs.  our  price  would  again  rise  as  far  as  that  compe-   -^ 
tition  would  permit,  viz.  to  SOs.  the  quarter. 

But  it  has  been  denied  that  the  price  of  corn  would  rise 
were  importation  prohibited. 

Sir  Henry  Pamell  (in  p.  12  of  his  pamphlet)  says,  ^^the 
effect  of  the  war,  but  more  particularly  of  the  Berlin  and 
Milan  Decrees,  and  of  our  own  Orders  in  Council,  has  been 
to  im-  II  pose  such  restrictions  on  the  importation  of  foreign  35 
com  during  the  last  five  years,  as  had  the  direct  operation  of 
an  act  of  parliament  imposing  very  high  duties  on  that  trade, 
by  giving  the  British  farmer  the  full  benefit  of  nearly  the 
whole  demand  of  the  British  market.  In  the  first  place  a 
very  high  price;  in  the  next  place  a  very  great  increased 
production  of  com;  and  in  the  last  place  a  very  great  fall  in 
the  price  of  it.'^ 

And  from  this  he  argues  (p.  43)  "that  in  the  next  year, 
as  the  farmer  will  have  the  full  benefit  of  the  whole  of  the 
demand  for  our  consumption,  he  will  probably  grow  as  much 


30  Sir  Edward  West 

as  he  has  grown  of  late  years;  and,  therefore,  if  the  crop  is 
a  good  one,  the  price  will  keep  as  low  as  it  now  is.  In  the 
following  years,  the  certainty  of  a  steady  market  will  lead 
to  a  superfluous  supply,  and  then  the  price  will  still  be  lower. 
It  will  thus  become  gradually  lower  and  lower  until  it  shall 
he  on  a  level  with  the  rest  of  Europe;  and  that  we  shall  be 
able  to  secure  permanently  a  superfluous  growth  of  corn,  by 
being  able  to  export  it,  and  sell  it  as  cheap  as  foreign  corn 
can  be  sold  in  the  foreign  market." 

ISTow  I  deny  that  there  has  been  any  fall  in  the  price  of 
36  corn,  as  stated  by  Sir  H.  Parnell.  || 

s.  d.  per  Qr. 
In  1808  the  average  price  of  wheat  was  79  0  ^ 

1809 95  7   1        .         ^     ->     *  r^ 

1810 106  2   I      App.  No.  1  of  Com- 

^^gj-j^  94  6   I   ^^^^  ^^*  Report,  p.  28. 


1812 125  5 


f      Windsor  prices,  App. 

In  1813 120  0  -{   of  Lords  Rep.  No.  12, 

[  p.  327. 

How  this  can  be  called  a  fall  in  price,  much  less  a  very 
great  fall,  I  am  at  a  loss  to  conceive,  even  allowing  for  any 
possible  additional  depreciation  of  our  currency. 

It  is  true  that  Sir  H.  Parnell  states,  "that  the  price  of 
wheat  (p.  42)  for  the  average  of  the  twelve  maritime  dis- 
tricts of  England  and  Wales  the  week  ending  the  21st  of 
May,  1814,  was  67s.  lid.  If  this  price  is  in  any  degree  a 
price  that  has  been  regulated  by  the  importation  of  foreign 
wheat,  to  that  degree  the  bill  for  restraining  importation 
would  advance  it.  But  this  price  is  a  price  settled  by  the 
quantity  of  our  own  wheat  in  the  market,  and  on  hand  in  the 
country;  and  therefore,  the  bill  cannot  advance  it.  The  fact 
is,  the  abundance  of  our  own  corn  alone  has  brought  down 
the  price  to  its  present  level ;  and  this  is  so  great,  that  there 
is  every  reason  to  suppose  that  it  will  fall  still  lower,  even  if 
37  the  bill  shall  become  a  law."  || 

Now  how  can  it  possibly  be  proved  or  known  for  a  fact, 
that  the  abundance  of  our  own  corn  alone  has  brought  down 
the  price  to  the  level  mentioned  by  Sir  H.  Parnell  ? 


The  Application  of  Capital  to  Land  31 

On  the  contrary  is  it  not  notorious  that  the  expectations 
of  importation,  if  not  actual  importation,  had  at  that  time 
considerably  reduced  the  price  of  wheat? 

The  witness  in  p.  26  of  the  last  Commons  Rep.  thus 
answers  questions  put  to  him. 

Question. — "  Do  you  not  conceive  that  the  present  low 
price  of  grain  is  wholly  occasioned  by  the  abundant  crop  of 
last  harvest,  and  not  in  consequence  of  any  expectation  of 
foreign  import  ?  " — "  Certainly  not ;  it  is  the  alarm  of  the 
importation  from  abroad." 

"Are  you  aware  of  any  large  importation  of  foreign  corn  ?" 
— "  There  is  an  expectation  of  it." 

"Are  you  aware  whether  any  foreign  com  has  been  im- 
ported ?  " — "  No ;  I  do  not  allude  to  any  particular  quantity 
lately  imported ;  but  the  farmers  are  very  much  alarmed,  and 
of  course  bring  every  bushel  to  market." 

With  respect  to  Sir  H.  ParnelFs  opinion  that  com  will    V 
become  lower  and  lower,  it  is  good  for  nothing,  unless  he     ^ 
can  show  that  the  expenses  of  cultivation  will  fall,  as  of 
course  the  ||  actual  price  cannot  permanently  fall  unless  the   38 
growing  or  natural  price  fall. 

That  rude  produce  does  rise  in  price  in  the  progress  of  im- 
provement, experience  as  well  as  theory  demonstrates.  That 
this  rise  too  in  the  price  of  rude  produce  is  followed  by  a 
rise  in  the  wages  of  labour,  and  communicates  itself,  more 
or  less  to  all  manufactures,  chiefly  of  course  to  those  in  which 
rude  produce  predominates  most,  and  in  a  less  degree  to 
those  manufactures  of  a  finer  kind  in  which  rude  produce 
bears  but  a  small  proportion  to  the  skill  of  the  artist,  is  also 
evident.  1st,  Looking  to  our  own  country,  com  has  been 
constantly  rising  in  price  since  the  middle  of  the  last  cen- 
tury. This  phenomenon  of  the  rise  in  the  price  of  com  has 
been  constantly  observed  in  all  improving  countries.  2dly, 
England  in  an  early  stage  of  improvement  exported  com  in 
exchange  for  manufactures,  as  Poland  and  America  do  at  the 
present  moment.  Our  wealth  and  population  increased,  and 
as  far  as  the  circumstances  of  Europe  and  our  own  laws  per- 


3d  Sib  Edwabd  West 

mitted,  we  imported  corn  in  exchange  for  our  manufactures; 
so  did  Holland  and  Genoa  in  the  time  of  their  wealth.  Such 
is  the  course  in  which  improving  nations  seem  destined  to 
move.     They  hegin  by  exporting  rude  produce  for  manufac- 

39  tures;  as  they  grow  more  wealthy  ||  they  export  less  com, 
and  fabricate  more  manufactures  at  home ;  in  a  further  stage 
they  export  manufactures  only,  and  receive  rude  produce  in 
return  from  nations  less  advanced  than  themselves,  and 
these  manufactures  gradually  change  in  kind,  containing  less 
and  less  of  rude  material,  and  more  and  more  of  manufac- 
turing skill.  The  price  of  every  thing  increases  rapidly,  and 
the  profits  of  stock  fall  so  low,  as  I  have  shown  they  must  do, 
from  the  enhanced  price  of  rude  produce,  that  at  last  even 
the  capital  of  the  merchant,  and  next  of  the  manufacturer, 
seeks  a  more  grateful  soil. 

It  is  not  a  little  singular  that  this  rise  of  the  real  price  of 
corn  in  the  progress  of  improvement  has  escaped  the  atten- 
tion of  the  author  of  the  Wealth  of  Nations,  though  he  ex- 
pressly states,  "that  all  other  sorts  of  rude  produce,  except 
corn  and  such  other  vegetables  as  are  raised  altogether  by 
human  industry,  naturally  grow  dearer  as  the  society  advances 
in  wealth  and  improvement."'  B.  1.  c.  11.  p.  339.  In  an- 
other passage  he  says,  "In  every  state  of  society,  in  every 
stage  of  improvement,  com  is  the  production  of  human  in- 
dustry. But  the  average  product  of  every  sort  of  industry  is 
always  suited  more  or  less  exactly  to  the  average  consump- 
tion: the  average  supply  to  the  average  demand.     In  every 

40  different  stage  of  im-  ||  provement,  besides,  the  raising  of 
equal  quantities  of  com  in  the  same  soil  and  climate,  will,  at 
an  average,  require  nearly  equal  quantities  of  labour;  or, 
what  comes  to  the  same  thing,  the  price  of  nearly  equal  quan- 
tities; the  continual  increase  of  the  productive  powers  of 
labour  in  an  improved  state  of  cultivation,  being  more  or 
less  counterbalanced  by  the  continual  increasing  price  of 
cattle,  the  principal  instruments  of  agriculture.  Upon  all 
these  accounts,  therefore,  we  may  rest  assured,  that  equal 
quantities  of  com  will,  in  every  state  of  society,  in  every  stage 


The  Application  of  Capital  to  Land  33 

of  improvement,  more  nearly  represent,  or  be  equivalent  to, 
equal  quantities  of  labour,  than  equal  quantities  of  any  other 
part  of  the  rude  produce  of  land."  B.  1.  c.  11.  p.  292.  and  see 
B.  1.  c.  11.  p.  382. 

Dr.  Smith  takes  notice  of  what  he  seems  to  think  a  vulgar 
error,  that  the  price  of  corn  is  always  lower  in  a  poor  coun- 
try than  in  a  rich. 

"  The  greater  part  of  the  writers  who  have  collected  the 
money  prices  of  things  in  ancient  times,  seem  to  have  consid- 
ered the  low  money  price  of  corn,  and  of  goods  in  general,  or, 
in  other  words,  the  high  value  of  gold  and  silver,  as  a  proof, 
not  only  of  the  scarcity  of  those  metals,  but  of  the  poverty 
and  barbarism  of  the  country  at  the  time  when  it  took 
place,  &c."  B.  1.  c.  11.  p.  375.  But  in  this  same  passage  ||  41 
he  allows  that  the  low  money  price  of  cattle,  poultry,  &c.  is 
a  proof  of  the  poverty  of  a  country.  Mr.  Hume  takes  notice 
of  the  fact  of  the  increase  of  the  price  of  provisions  and 
labour,  in  an  improving  country,  and  assigns  a  very  insuiSi- 
cient  reason  for  it,  viz.  the  increase  of  the  quantity  of  money. 

"  There  seems  to  be  a  happy  concurrence  of  causes  in  hu- 
man affairs,  which  check  the  growth  of  trade  and  riches,  and 
hinder  them  from  being  confined  intirely  to  one  people,  as 
might  naturally  at  first  be  dreaded  from  the  advantages  of 
an  established  commerce. — Where  one  nation  has  got  the  start 
of  another  in  trade,  ^tis  very  difficult  for  the  latter  to  regain 
the  ground  it  has  lost,  because  of  the  superior  industry  and 
skill  of  the  former,  and  the  greater  stocks  of  which  its  mer- 
chants are  possessed,  and  which  enable  them  to  trade  for  so 
much  smaller  profits.  But  these  advantages  are  compen- 
sated, in  some  measure,  by  the  low  price  of  labour  in  every 
nation  which  has  not  an  extensive  commerce,  and  does  not 
very  much  abound  in  gold  and  silver.  Manufactures,  there- 
fore, gradually  shift  their  places,  leaving  those  countries  and 
provinces  which  they  have  already  enriched,  and  flying  to 
others,  whither  they  are  allured  by  the  cheapness  of  pro- 
visions and  labour,  till  they  have  ||  enriched  these  also,  and  43 
are  again  banished  by  the  same  causes.     And,  in  general,  we 


34  Sir  Edward  West 

may  observe,  that  the  deamess  of  every  thing,  from  plenty 
of  money,  is  a  disadvantage  which  attends  an  established 
commerce,  and  sets  bounds  to  it  in  every  country,  by  enabling 
the  poorer  states  to  undersell  the  richer  in  all  foreign  mar- 
kets/'    (Hume,  vol.  1.  Part  2.  Essay  3.  pp.  312  and  313.)' 
I       The  only  means  of  retarding  this  necessary  progress  of 
f  things  is  by  importing  rude  produce  from  countries  where 
[  we  can  buy  it  cheaper  than  we  can  grow  it  at  home. 

By  such  means  we  might,  to  a  very  great  degree,  unite  the 
advantages  of  a  fresh  country,  and  of  one  highly  improved. 
By  these  means  we  might  purchase  our  rude  produce  cheap, 
and  manufacture  it  cheap;  but  if  we  refuse  to  import  our 
rude  produce,  we  must  daily  approximate  to  that  state  which 
Hume  has  so  strongly  described.  Great  question  has  been 
made  of  the  truth  of  the  fact,  which  is  noticed  by  Dr.  Smith, 
that  any  rise  in  the  price  of  corn  communicates  itself  to  every 
other  commodity.  It  is  immaterial  here  to  enter  into  the 
question  whether  Dr.  Smith  meant  real  or  nominal  price. 
The  rise  in  the  real  price  of  any  thing  which  immediately 
43  and  fully  communicates  itself  to  every  other  article  ||  seems, 
indeed,  a  contradiction  in  terms;  because  the  real  price  of 
any  article  is  its  value  in  exchange  for  every  other:  but  if 
the  rise  in  price  of  any  one  be  immediately  and  fully  com- 
municated to  every  other,  the  rise  is  merely  nominal,  as  that 
article  can  now  purchase  no  more  of  any  other  article  than 
before.  It  is  sufficient  for  my  present  purpose,  if  it  be  true, 
that  by  any  increase  of  expense  in  obtaining  rude  produce 
the  whole  wealth  and  comfort  of  the  community  is  dimin- 
ished, the  command  of  each  individual  over  all  the  neces- 
saries and  luxuries,  both  domestic  and  foreign,  lessened.* 
That  such  must  be  the  consequence  of  the  increasing  expense 

*  If  all  the  commodities  in  a  society,  except  money,  were  di- 
minished in  equal  proportion,  the  real  price,  i.  e.  their  value  in 
exchange  for  each  other  would  remain  the  same.  If  the  money 
were  diminished  in  the  same  proportion,  their  nominal  price 
would  also  remain  the  same,  yet  in  each  case  it  is  obvious  that 
a  large  portion  of  wealth  would  be  lost  to  the  society. 


The  Application  of  Capital  to  Land  35 

of  raising  rude  produce  is  obvious  to  the  slightest  considera- 
tion. The  larger  the  capital  required  to  raise  the  rude  pro- 
duce of  a  country,  the  less  in  proportion  can,  of  course,  be 
spared  for  its  manufactures. 

"  Throughout  the  whole  world  the  number  of  manufac- 
tures, of  proprietors,  and  of  persons  ||  engaged  in  the  various  44 
civil  and  military  professions  must  be  exactly  proportioned 
to  the  surplus  or  net  produce  of  the  earth,  and  cannot  in  the 
nature  of  things  increase  beyond  it.  If  the  earth  had  been 
so  niggardly  of  her  produce  as  to  oblige  all  her  inhabitants 
to  labour  for  it,  no  manufacturers  or  idle  persons  could  ever 
have  existed.'^  Malthus,  b.  3.  c.  8.  p.  309.°  Suppose  a  coun- 
try insulated  from  all  others  and  containing  one  million  in- 
habitants, the  soil  of  which  is  such  that  half  the  number  are 
sufficient  to  raise  food  for  the  whole;  and  suppose  the  other 
half  to  be  employed  in  fabricating  manufactures  for  them- 
selves and  for  the  agricultural  labourers.  Suppose  now  that 
this  million  of  inhabitants  increases  to  two  million;  if  from 
the  increased  difficulty  of  raising  food  for  the  two  million 
inhabitants  it  becomes  necessary  to  employ  two-thirds  of 
them  in  providing  subsistence  for  the  whole,  there  is  now 
but  one-third  of  the  whole  left  to  administer  to  the  other 
wants  of  the  society,  and  if  the  effective  powers  of  labour  in 
manufactures  be  not  increased,  and  that  in  a  degree  sufficient 
to  compensate  for  the  greater  proportion  of  the  labour  of  the 
whole  community  which  is  now  required  for  agriculture,  the 
revenue  and  comforts  of  the  whole  community  must  be 
diminished.  But  suppose  now  this  country  to  ||  open  a  com-  45 
munication  with  a  neighbouring  country  which  had  not  car- 
ried its  skill  in  manufactures  so  far,  but  grew  its  corn  much 
cheaper,  so  that  the  former,  by  turning  a  part  of  her  hands 
from  agriculture  to  manufactures,  could  make  as  many  man- 
ufactures as  would  purchase  twice  as  much  corn  from  the 
new  country  as  those  hands  had  before  raised.  The  conse- 
quence would,  of  course  be,  that  the  former  country  could 
draw  another  portion  of  her  hands  from  agriculture  to  man- 


36  Sib  Edward  West 

ufacture  for  herself,  and  the  real  wealth  of  the  whole  com- 
munity would  be  increased. 

I  come  now  to  the  consideration  of  some  of  the  conse- 
quences of  a  free  importation  of  foreign  corn;  and,  first  I 
shall  consider  its  effects  upon  our  own  agriculture ;  and  I  will 
assume  that  the  growing  price  of  foreign  wheat  is  such  that 
it  can  be  imported  into  this  country  and  sold  in  our  markets 
at  a  price  as  low  even  as  45s.  the  quarter,  in  the  present  state 
of  the  currency.  Taking,  as  I  have  before  done,  the  present 
growing  price  of  our  wheat  to  be  90s.  the  quarter,  it  would 
appear  to  be  impossible  for  our  farmers  to  bear  this  unequal 
competition. 

It  would  appear  to  cursory  observation  that  the  whole  of 

our  agriculture  would,  in  time,  be  superseded.     And  such 

46  would  inevitably  be  ||  the  case  if  our  expenses  of  cultivation 

should  not  diminish  as  our  growth  diminished,  nor  the  ex- 

;  penses  of  foreign  growth  increase  as  their  produce  increased. 

1  The  constant  difference  of  45s.  the  quarter  would  necessarily 

j  induce  the  foreigner  to  increase  his  growth,  and  compel  the 

;'  home  grower  to  diminish  his,  till  the  former  had  completely 

expelled  the  latter  from  the  market. 

But  there  are  limits  to  this  dependance  of  any  country  on 
foreigners  for  an  article  of  the  first  necessity;  and  these 
limits  are  to  be  found  in  the  principle  which  I  have  stated. 
That  principle  will  shew  that  in  such  case,  as  the  growth  of 
the  foreigner  increased  the  proportionate  expense  of  his 
growth  would  increase,*  and  as  the  home  growth  was  dimin- 
ished, the  proportionate  expense  of  the  home  growth  would 
also  be  diminished,  since  a  larger  growth  is  raised  in  any 
given  country,  at  a  larger  proportionate  expense  than  a 
smaller  growth.  Say  that  the  first  year  of  importation  we 
import  half  a  million  quarters;  the  next  year  the  foreign 

*  It  is  indifferent  for  the  present  purpose  whether  this  increase 
of  the  price  of  the  foreign  supply  would  proceed,  as  it  partly 
would,  from  an  increased  expense  of  growth,  or  as  it  would  also 
partly  from  the  necessity  of  drawing  it  from  more  distant  regions. 


The  Application  of  Capital  to  Land  37 

grower,  in  order  to  meet  the  {|  increased  demand  for  foreign  47 
com,  will  increase  his  growth,  say  half  a  million  quarters, 
and  the  foreign  growing  price  will  rise,  say  from  45  to  50s. 
the  quarter.  The  home  grower  will  diminish  his  growth 
half  a  million  quarters,  and  the  home  growing  price  will  fall, 
say  from  90  to  805.  the  quarter.  The  actual  price  of  both 
in  the  market  must  meet  and  be  at  some  point  between  50 
and  805.  say  at  655.  This  price  is  still  such  as  to  induce  the 
foreigner  to  increase  his  cultivation,  and  the  home  grower  to 
diminish  his.  In  consequence  the  foreigner's  growing  price 
will  be  still  further  increased,  and  the  home  grower's  still 
more  diminished,  say  to  6O5.  the  quarter,  and  say  that  the 
actual  price  in  our  market  falls  to  6O5.  Both  the  home 
grower  and  the  foreigner  are  now  just  paid  the  natural  price 
of  their  produce,  and  there  is  no  longer  any  motive  to  the 
one  to  increase  his  cultivation,  nor  to  the  other  to  diminish 
his.  I  have  not  pretended  here  to  approximate  to  the  de- 
grees in  which  the  prices  would  rise  and  fall,  nor  to  the  point 
at  which  the  growing  prices  of  home  wheat  and  foreign  wheat 
would  meet.  The  process  would  be  slower,  and  therefore 
less  violent  than  I  have  supposed.  All  I  mean  to  assert  is, 
that  the  growing  price  of  the  former  would  fall,  and  the 
growing  price  of  the  latter  rise,  till  they  met  ||  at  some  point  48 
between  the  original  prices  of  each.  This  point  would,  of 
course,  be  much  nearer  the  present  growing  price  of  the  for- 
eign than  of  the  domestic  growth,  as  the  effect  of  the  impor- 
tation divided  among  many  foreign  markets  would  be  less  to 
each  than  the  effect  of  the  importation  operating  on  our 
single  market.  It  is  remarkable  how  differently  the  circum- 
stance of  a  similar  disparity  of  price  would  affect  manufac- 
tures. Suppose  the  foreigner  could  manufacture  broad  cloth 
and  sell  it  in  our  market  at  half  the  price  at  which  we  could 
afford  to  seU  it;  the  home  manufacturer,  as  in  agriculture, 
would  immediately  diminish  his  manufacture,  the  foreigner 
would  increase  his;  but  the  more  the  home  manufacturer 
diminished  his  manufacture,  the  greater  would  be  the  pro- 
portionate expense  or  natural  price  of  it;  the  more  the  for- 


38  Sir  Edwaed  West 

eigner  increased  his,  the  less  would  be  the  natural  price  of 
his  manufacture,  upon  the  principle  that  the  larger  the  con- 
cern in  any  manufacture  the  further  can  the  subdivision  of 
labour  and  application  of  machinery  be  carried. — See  W.  of 
N.  B.  1.  c.  3. 

Next  I  shall  consider  the  effects  of  a  free  importation  of 
corn  upon  rents.     Supposing  the  proportionate  expenses  of 

49  raising  rude  produce  to  remain  the  same,  whatever  were  the  || 
amount  of  that  produce;  there  would  be  ground  indeed  for 
the  alarm  of  landlords.  For  it  would  appear,  as  has  been 
frequently  stated,  that  in  such  case  the  farmer  could  not 
afford  to  pay  any  rent  at  all.  Thus  suppose  100  acres  of 
land  tilled  for  wheat  let  at  a  calculation  of  the  price  of  wheat 
at  905.  the  quarter;  and  suppose  the  capital  laid  out  on  such 
land  to  amount  to  lOOOZ.,  take  the  rent  at  300Z.  a-year,  the 
profits  of  the  capital  must  be  10  per  cent.  i.  e.  lOOZ.  a-year. 
The  whole  produce  of  this  land  must  therefore  be  1400Z. 
Suppose  now  wheat  to  fall,  as  it  has  fallen,  one-third,  i.  e.  to 
60s.  the  quarter.  The  produce  of  the  land  would  now  be 
only  two-thirds  of  1400Z.  that  is  about  932Z.  and  it  is  obvious 
that  the  farmer,  so  far  from  being  able  to  pay  any  rent,  would 
not  even  reproduce  his  capital  laid  out,  and  no  diminution  of 
his  capital  would  give  him  any  profit,  but  would  merely 
diminish  his  loss. 

But  our  principle  will  shew  that  by  a  diminution  of  the 
capital  laid  out  by  the  farmer,  he  will  be  enabled  both  to  re- 
produce his  capital  with  the  common  profits  of  stock  on  that 
capital,  and  also  a  rent  not  very  much,  perhaps,  below  that 
which  he  paid  before. 

It  is  the  diminishing  rate  of  return  upon  additional  por- 

50  tions  of  capital  bestowed  upon  ||  land  that  regulates,  and 
almost  solely  causes,  rent. 

If  capital  might  be  expended  indefinitely  with  the  same 
advantage  upon  land,  the  produce  would,  of  course,  be  un- 
limited ;  and  this  would  have  the  same  effect  upon  rent  as  an 
unlimited  quantity  of  land  convenient  for  cultivation.  In 
either  case  the  rent  would  be  very  small.    But  it  is  the  neces- 


The  Application"  or  Capital  to  Land  39 

sity  of  having  recourse  to  inferior  land,  and  of  bestowing 
capital  with  diminished  advantage  on  land  already  in  tillage 
which  increases  rent.  Thus,  if  in  case  of  any  increased  de- 
mand for  com,  capital  could  be  laid  out  to  the  same  advan- 
tage as  before,  the  growing  price  of  the  increased  quantity 
would  be  the  same  as  before,  and  competition  would,  of 
course,  soon  reduce  the  actual  price  to  the  growing  price,  and 
there  could  be  no  increase  of  rent.  But  on  any  increased  de- 
mand for  com,  the  capital  I  have  shewn  which  is  laid  out  to 
meet  this  increased  demand  is  laid  out  to  less  advantage. 
The  growing  price,  therefore,  of  the  additional  quantity 
wanted  is  increased,  and  the  actual  price  of  that  quantity 
must  also  be  increased.  But  the  com  that  is  raised  at  the 
least  expense  will,  of  course,  sell  for  the  same  price  as  that 
raised  at  the  greatest,  and  consequently  the  price  of  all  corn 
is  raised  ||  by  the  increased  demand.  But  the  farmer  gets  51 
only  the  common  profits  of  stock  on  his  growth,  which  is 
afforded  even  on  that  corn  which  is  raised  at  the  greatest  ex- 
pense ;  all  the  additional  profit,  therefore,  on  that  part  of  the 
produce  which  is  raised  at  a  less  expense,  goes  to  the  landlord 
in  the  shape  of  rent. 

Thus  suppose  10  acres  of  land  which  will  return  20  per 
cent,  on  a  given  capital,  say  lOOZ. ;  10  acres  which  will  return 
19  per  cent,  and  so  on,  as  in  the  following  table. 


Acres. 

Capital. 

Net  Produce. 

10 

100 

20 

10 

100 

19 

10 

100 

18,  &c. 

10 

100 

11 

10 

100 

10 

Supposing  the  profits  of  stock  to  be  10  per  cent,  the  last 
ten  acres  could  not  be  taken  at  any  rent  for  the  purpose  of 
cultivation,  but  might  be  cultivated  by  the  owner  of  the  land, 
or  might  afford  a  rent  if  left  as  pasture.  The  10  acres 
which  afford  11  per  cent,  would,  after  paying  the  profits  on 
the  tenant^s  capital,  pay  one  per  cent,  as  rent,  and  as  the 


40  Sir  Edwabd  West 

corn  which  was  raised  on  the  10  best  acres  would  sell  for 
the  same  price  as  that  raised  on  the  10  worst,  such  land 

52  would  pay  to  the  landlord  lOZ.  as  ||  rent,  the  next  10  acres  dl, 
and  so  on.  Suppose  now  the  price  of  corn  to  rise,  and  the 
profit  on  the  last  10  acres  to  be  increased  in  consequence  from 
10?.  to  IIZ.  it  is  evident  that  the  ten  acres  which  before  could, 
in  cultivation,  just  pay  the  profits  of  stock,  would  now  afford 
a  rent,  and  might  be  brought  into  cultivation,  and  that  the 
rent  would  be  raised  on  all  land.  For  the  same  reason,  if  the 
price  of  com  were  to  fall  so  as  to  reduce  the  profit  on  the  last 
10  acres  one  per  cent,  some  land  would  be  withdrawn  from 
cultivation,  and  the  rent  of  that  land  which  remained  in  cul- 
tivation would  be  lowered.  But  we  know  that  a  rise  in  the 
price  of  com  has  the  effect  not  only  of  drawing  fresh  land  into 
cultivation,  but  also  of  turning  fresh  capital  on  land  before 
in  cultivation;  and  that  a  permanent  fall  in  the  price  would 
have  the  effect,  not  only  of  withdrawing  land  from  tillage, 
but  also  the  effect  of  withdrawing  part  of  the  capital  from 
land  which  might  be  still  kept  in  tillage  and  cultivated  in  a 
less  expensive  manner.  But  if  you  take  the  10  acres  of  land 
I  before  mentioned,  which  return  at  the  given  price  20  per 
cent.,  it  would  seem  impossible  for  any  diminution  of  price 
imder  a  diminution  of  one-half  to  draw  capital  from  such 
land;  for  if  the  price  of  corn  were  to  fall  so  low  as  even  to 

53  reduce  the  profit  to  11  ||  per  cent.,  still  it  might  be  worth  while 
to  lay  out  the  same  capital,  as  it  would  yield  one  per  cent, 
more  than  capital  in  any  other  employment,  which  one  per 
cent,  would  be  the  rent. 

This  difficulty  is  explicable  on  our  principle  alone.  The 
truth  is,  that  any  land  which  returns  20  per  cent,  on  lOOZ., 
must,  as  I  have  shewn,  return  more  on  a  lesser  capital  than 
lOOZ.,  and  consequently  must  return  more  on  the  first  portion 
of  lOOZ.  laid  out  on  it  than  on  the  latter  portion  of  it,  and 
would  consequently  produce  the  return  somewhat  in  this  way, 
the  first  lOZ.  might  reproduce  40  per  cent,  net  produce;  the 
second  lOZ.  30  per  cent,  and  so  on,  and  the  last  layer  of  capital 
would  not  produce  more  than  10  per  cent.,  as  the  farmer 


The  Application  of  Capital  to  Land  41 

would,  of  course,  lay  on  as  much  capital  as  would  reproduce 
him  the  common  profits  of  stock,  which  are  supposed  to  be 
10  per  cent. 

The  rent  of  the  landlord  would  then  still,  as  before,  be  all 
that  was  made  on  the  whole  capital  above  what  the  last  or 
least  profitable  portion  of  that  capital  produced;  and  in  the 
same  manner  as  before,  if  the  price  of  com  increased  so  as  to 
make  that  portion  of  capital  which  before  produced  10  per 
cent,  now  produce  11  per  cent,  another  portion  of  capital 
would  be  laid  on.  And  in  the  same  manner,  if  the  price  of 
com  were  to  fall  so  as  to  reduce  ||  the  profits  on  the  last  por-  54 
tion  of  capital  from  10  to  9  per  cent,  that  portion  would  be 
withdrawn.  In  case,  then,  of  any  fall  in  the  price  of  corn, 
that  portion  of  the  capital  which  before  afforded  the  smallest 
profit  will  be  withdrawn,  and  that  only  will  be  left  which 
continues  to  }deld  an  adequate  return,  and  the  effect  of  such 
reduction  of  price  on  rent  will  be  nearly  as  follows : 

Suppose  again  the  case  of  land  let  on  the  calculation  of 
the  price  of  wheat  at  90s.  the  quarter,  the  rent  300Z.  a-year, 
the  tenants  capital  amounting  to  lOOOZ.  and  his  profit  on 
that  capital  to  be  1001.  a-year,  the  produce  is,  as  before,  1400Z. 
Now,  after  the  reduction  of  wheat  to  605.,  if  the  tenant  re- 
tained the  same  capital  on  the  land,  he  would  not,  as  I 
shewed,  reproduce  even  his  capital,  much  less  be  able  to  pay 
any  rent. 

But  suppose  now  on  this  fall  of  price  he  diminishes  his 
capital  to  800Z. 

Since  he  made  on  his  whole  capital  of  lOOOZ.  before  the 
reduction  of  price  400L  i.  e.  40  per  cent,  he  must  have  made 
more  than  40  per  cent,  upon  the  first  SOOl.  and  even  after 
the  reduction  of  price,  he  may  make  40  per  cent,  on  the  SOOl. 
that  is,  320Z.  of  which  his  own  share,  as  profit,  will  be  SOL 
leaving  to  the  landlord  24:01.  as  rent.  ||  55 

Thus  upon  this  supposition,  a  fall  in  the  price  of  com 
of  -J,  would  reduce  rents  but  J.  The  reader  will  perceive 
that  there  are  many  considerations,  such  as  taxes,  poor  rates, 
and  the  distress  of  individuals,  arising  from  a  rapid  shifting 


42  Sir  Edward  West 

of  capital  from  one  employment  to  another,  which  I  have  not 
taken  into  the  account  in  this  essay,  and  therefore  I  have  not 
pretended  to  strike  the  balance  of  the  arguments  for  and 
against  some  restriction  of  importation;  it  appears  to  me, 
however,  that  the  principle  which  it  has  been  my  object  to 
explain  will  shew  it  to  be  highly  impolitic  to  fix  the  price 
below  which  importation  is  to  be  checked  at  a  high  point. 
Those  other  considerations  would  demand  a  much  longer  in- 
quiry ;  upon  the  whole,  I  am  inclined  to  think,  that  it  would 
be  reasonable  to  grant  to  the  agriculturist,  for  the  present, 
such  protection  as  would  keep  up  the  price  of  com  to  70^.^ 
or  at  the  most  76s.  the  quarter. 


OBSEEVATIONS  se 

ON   THE 

BOUNTY  of   1688. 


Another  object  of  this  publication  is  to  shew  the  fallacy 
of  the  arguments  of  those  who  have  maintained,  that  the 
bounty  on  the  exportation  of  com  granted  by  the  legislature 
in  1688,  rendered  that  article  cheap. 

A  refutation  of  this,  as  I  conceive,  erroneous  doctrine  is 
important,  not  only  because  such  doctrine  weakens  our  reli- 
ance upon  the  truth  of  the  general  rule  of  political  economy, 
that  all  artificial  regulations  in  commerce  are  injurious;  a 
rule  which  must  frequently  be  the  only  guide,  even  of  the 
best  informed,  when  treading  a  new  ground  in  the  science; 
but  because  such  doctrine  has  been  used  as  a  defence  of  para- 
doxical opinions  on  the  subject  of  the  proposed  com  bill. 

I  originally  took  up  the  subject  of  the  bounty  on  the  ex- 
portation of  com,  without  any  preconceived  opinion  as  to  its 
merits;  but  merely  because  it  forms  one  of  the  most  promi- 
nent features  in  the  1st  report  of  the  committee  of  the  House 
of  Commons,  and  in  Mr.  ||  Malthus's,"  Lord  Lauderdale's,"  57 
and  Sir  H.  Pamell's  "  pamphlets.  Of  course,  as  the  first  step, 
I  examined  the  facts  from  which  it  had  been  inferred  that  the 
bounty  had  lowered  the  price  of  com,  and  was  not  a  little 
surprised  to  find  that  the  facts  do  not  at  all  support  that 
doctrine.     This  I  trust  I  shall  make  appear  to  the  reader. 

But  before  I  enter  into  an  examination  of  the  facts,  I  must 
observe,  that  the  principle  which  I  have  stated  would  shew 
of  itself,  that  if  the  bounty  had  any  operation  at  all  in  in- 
creasing our  growth,  it  must  have  raised  the  price  in  the 
home  market  above  what  it  would  otherwise  have  been;  for 


44  Sir  Edwaed  West 

that  principle  shews  that  a  larger  growth  is  raised  at  a 
greater  proportionate  expense  than  a  smaller. 

It  may  be  necessary  to  premise  for  the  information  of  those 
who  may  not  have  given  much  attention  to  the  subject  of  the 
com  laws,  that  in  1688  a  bounty  of  5s.  a  quarter  was  granted 
by  the  legislature  on  the  exportation  of  corn,  whilst  it  was  at 
or  under  485.  the  quarter;  that  this  bounty  was  suspended 
for  a  single  year  three  or  four  times,  between  1688  and  1765 ; 
that  in  1765  it  was  suspended  for  a  year;  and  that  this  sus- 
pension was  annually  renewed  till  1773,  when  the  bounty 

58  was  ultimately  abolished.  || 

Mr.  Charles  Smith,  the  author  of  the  Com  Tracts,  fre- 
quently mentioned  in  the  Wealth  of  Nations,  was,  as  far  as 
I  am  informed,  the  first  writer  who  maintained  that  the 
bounty  on  exportation  had  the  effect  of  reducing  the  price 
of  corn.  His  opinion  has  been  adopted  by  many  later  writ- 
ers, but  with,  as  I  shall  presently  prove,  much  less  shew  of 
reason  than  that  author  had,  considering  the  facts  which 
have  subsequently  occurred.  One  of  the  passages  in  which 
Mr.  C.  Smith  expresses  this  doctrine  is  as  follows. 

"The  bounty  was  first  given  on  the  exportation  of  grain 
,  in  the  year  1689,*  now  seventy  years  since,  during  which 
period  grain  hath  in  general  been  from  fifteen  to  twenty 
per  cent,  cheaper  than  for  forty  years  before  that  time,  which 
is  a  good  proof  of  the  utility  of  the  law  by  which  it  is  ordered 
to  be  given,  and  which  is  further  proved,  in  that  since  its 
first  establishment  the  parliament  have  not  thought  fit  to 
suspend  it  either  in  part,  or  the  whole,  only  four  times,  viz. 
in  1698,  1709,  1740,  and  1757,  which  last  suspension  is  still 
in  force,  and  to  continue  to  Christmas  next.'^ 

"  That  corn  has  been  as  much  cheaper  since  the  bounties 

59  took  place  as  before  men-  ||  tioned,  is  so  notorious,  that  the 
prices  thereof  to  which  the  bounties  are  payable  by  law, 
which  when  first  established  were  thought  moderate,  and 
under  which  the  then  parliament  thought  the  farmer  could 

*  This  was  written  in  January,  1759. 


The  Application  of  Capital  to  Land  45 

not  afford  to  grow  it,  are  now  thought  very  dear,  and  long 
before  com  is  sold  at  those  prices  at  which  the  bounties  are 
to  cease  of  course,  we  have  of  late  heard  clamours  for  taking 
the  bounty  off  and  stopping  the  exportation."  * 

There  can  be  no  doubt  that  the  average  price  of  corn  for 
a  period  of  several  years,  during  the  existence  of  the  bounty 
on  exportation,  was  lower  than  at  any  period  of  the  same 
length  before  or  since. 

But  that  this  low  price  of  com  cannot  with  any  fairness 
be  attributed  to  the  bounty,  will  appear  from  an  examination 
of  the  tables  of  the  prices  for  a  considerable  period  before 
the  grant  of  the  bounty,  and  during  its  continuance,  and 
after  its  abolition.  It  will  be  found  that  the  average  price 
of  com  for  ten  years 

Average  of  20  Years. 

;^2         6       10 


2       0     10 


From  1649 

£ 

«. 

d. 

to     1658 

was 

2 

7 

0 

From  1659 

to     1668 

was 

2 

6 

8 

From  1669 

to     1678 

was 

2 

3 

4 

From  1679 

to     1688 

was 

1 

18 

4 

From  1689 

to     1698 

was 

2 

7 

0 

From  1699 

to     1708 

was 

1 

13 

9 

From  1709 

to     1718 

was 

2 

7 

5 

From  1719 

to     1728 

was 

1 

16 

3 

From  1729 

to     1738 

was 

1 

12 

7 

From  1739 

to     1748 

was 

1 

11 

9 

1     10 


1     12 


It  appears  therefore  that  the  price  of  corn  had  uniformly 
declined  during  thirty  years  before  the  grant  of  the  bounty. 
For  the  ten  years  immediately  after  the  grant  of  the  bounty 
it  rose  considerably,  the  next  ten  years  fell  again,  and  then 
for  the  subsequent  ten  rose  again  much  higher  than  it  had 
been  before  the  grant  of  the  bounty.  And  if  you  take  the 
fall  in  price  for  thirty  years  before  the  bounty  it  will  be 

♦Smith's  Corn  Tracts,   p.   99.^' 


60 


46  Sir  Edwaed  West 

found  greater  than  that  which  took  place  even  for  sixty  years 
after  it,  and  not  only  greater  in  amount  but  greater  in  pro- 
portion. For  the  price  of  com  fell,  in  thirty  years,  before 
the  bounty,  from  21.  7s.  to  11.  18s.  4:d.,  that  is  Ss.  Sd.  But 
the  price  of  corn  even  in  the  lowest  ten  years  after  the  bounty 
(from  1739  to  1748)  was  11.  lis.  9d.  which  from  11.  ISs.  4d 
is  a  fall  of  but  6s.  Hd. 
61  I  cannot  conceive  any  state  of  facts  which  ||  would  lead 
more  directly  than  these  to  a  conclusion  the  very  opposite  to 
that  which  the  advocates  of  the  bounty  have  drawn  from 
them.  A  consideration  of  the  subsequent  rise  of  price  after 
its  greatest  depression  in  1743  and  1744  will  equally  shew 
that  as  a  grant  of  the  bounty  was  not  the  cause  of  the  low 
price  of  corn,  neither  was  the  repeal  of  it  the  cause  of  the 
high  price.*     It  will  be  found  that  the  average  price  of 


corn  for  ten  years 

From  1744  ) 

to     1753  j" 

From  1754 


om  1754  ) 
to     1763  f 


was      1     11 
was      1     16 


From  1764  )         ^^s       2       9       7 

to     1773  (■        waa       ^       »       <     Bounty  repealed. 

From  1774)        ^„„       o       .       i 


to     1783  / 

From  1784 -> 

to     1793  / 


was       2     10     11 


It  appears  therefore  that  the  price  of  corn  began  to  rise 

twenty  years  before  the  repeal  of  the  bounty,  that  for  ten 

years  after  the  repeal  instead  of  continuing  to  rise  it  rather 

fell,  and  then  began  again  to  rise,  but  not  near  so  rapidly  as 

62  it  had  done  before  the  repeal  of  the  bounty.  || 

If  instead  of  the  years  I  have  selected  the  average  be 
taken  from  any  other  point  the  result  will  be  similar.  Thus, 
take  the  ten  cheapest  years,  and  then  periods  of  ten  years  on 
each  side.     The  cheapest  period  in  all  our  annals  was  from 

♦  Surely  it  was  not  very  bold,  as  Mr.  Malthus  asserts  of  Dr. 
Smith,  to  deny  the  inlQuence  of  the  bounty  in  reducing  the  price 
of  corn.     (See  Essay  on  Population,"  vol.  ii,  p.  240.) 


The  Application  of  Capital  to  Land  47 

1742  to  51.  And  it  will  be  found  that  the  price  regularly 
sinks  as  it  approaches  to,  and  ascends  as  it  recedes  from  this 
period.     Thus  the  average  of  ten  years 


From  1702  ) 
to     1711  f 

was 

£' 

s. 
19 

d. 
10 

From  1712  } 
to     1721  f 

was 

18 

0 

From  1722  ) 
to     1731/ 

was 

16 

10 

From  1732  ) 
to     1741  y 

was 

14 

4 

From  1742  [ 
to     1751  f 

was 

9 

4. 

From  1752  ) 
to     1761  \ 

was 

17 

0 

From  1762  ) 
to     1771  \ 

was 

o 

4 

10 

From  1772  } 
to     1781  f 

was 

2 

9 

0 

From  1782  \ 
to     1791  / 

was 

2 

10 

0 

-Lowest. 


For  more  than  twenty  years  then  before  the  recal  of  the 
bounty,  (1773,)  the  price  of  corn  had  begun  to  rise.  It  is 
clearly  right  to  take  ||  for  this  purpose  the  date  of  the  total 
abolition  of  the  bounty,  not  the  time  (1765)  at  which  the 
annual  suspension  began,  as  the  epoch  of  the  recall,  (though 
Sir  H.  Pamell  contends  the  contrary.)  The  annual  suspen- 
sion could  not  have  destroyed  the  effect  of  the  bounty,  being 
merely  on  account  of  the  actual  high  price  and  temporary,  so 
that  the  growers  would  look  forward  to  the  renewal  of  the 
bounty,  when  it  could  be  of  any  service  to  them,  namely, 
when  prices  were  low,  and  must  have  had  the  same  encour- 
agement from  it  as  before.  I  may  notice  here,  that  if  any 
allowance  of  time  is  to  be  made  for  the  bounty  to  come  into 
operation  after  it  was  granted,  an  equal  allowance  should  be 
made  for  it  to  cease  to  operate  after  its  repeal.  For  if  the 
farmers  could  not  immediately  adapt  themselves  to  the  new 
state  of  things  when  the  bounty  was  granted,  they  would 
probably  require  the  same  space  of  time  to  adapt  their  pro- 
ceedings to  the  repeal  of  the  bounty.     It  is  proper,  however. 


48  SiK  Edwakd  West 

to  observe  that  the  price  of  corn  really  began  to  rise  from  the 
year  1744,  which  an  examination  of  the  tables  will  prove. 
The  rise,  therefore,  commenced  twenty-nine  years  before  the 
repeal  of  the  bounty,  and  twenty-one  years  before  the  annual 
suspension.   In  fact,  the  low  price  of  corn  was  the  cause  of  the 

64  grant  of  the  bounty,  and  it  was  1|  so  expressed  by  the  legisla- 
ture. The  year  1687  was  a  cheaper  year  than  any  in  our 
records,  except  the  years  1743  and  1744; — (the  average  price 
of  the  quarter  of  com  for  the  year  1687  was  11.  2s.  4^^. ;  in 
the  years  1743  and  44  it  was  two-pence  cheaper.)  In  1688 
the  act  which  granted  the  bounty  on  the  exportation  of  com 
was  passed.  And  the  preamble  runs  that,  "  Forasmuch  as  it 
has  been  found  by  experience  that  the  exportation  of  com 
and  grain  into  foreign  parts,  when  the  price  thereof  is  at  a 
low  rate  in  this  kingdom,  has  been  a  great  advantage  not 
only  to  the  owners  of  land,  but  to  the  trade  of  this  kingdom 
in  general:     Be  it  therefore,'^  &c. 

It  is  well  known  by  all  who  are  conversant  with  the  his- 
tory of  that  period,  that  it  was  the  high  price  of  com,  in 
1773,  which  raised  a  clamour  against  the  bounty,  and  in- 
duced the  legislature  to  repeal  it ;  *  so  that  in  each  case  the 
price  of  corn  was  the  cause  of  legislative  interference,  and 
not  the  effect.  Corn  was  cheap,  and  exportation  was  natu- 
rally not  only  allowed  but  encouraged ;  corn  became  dear,  and 
exportation  was  as  naturally  prohibited,  yet,  because  the 
cheapness  continued  under  that  encouragement,  and  the  dear- 
ness  was  not  removed  by  the  prohibition,  it  has  been  argued 

65  that  the  ||  encouragement  to  export  was  the  cause  of  the  cheap- 
ness, and  the  prohibition  of  exportation  the  cause  of  the  dear- 
ness. 

Mr.  Malthus  has  put  the  argument  in  favour  of  *lie  bounty 
in  another  shape,  supposing  it  had  the  effect  of  steadying  the 
price  of  com,  and  of  lowering  it  on  the  whole  by  keeping  it 
down  in  scarce  years,  though  he  allows  it  may  have  raised 

*  See  Smith's  Corn  Tracts,  passim. 


The  Application  of  Capital  to  Land  49 

it  in  plentiful  years.     See  Malthus's  Essay  on  Pop.  pp.  239, 
240,  &c.  and  259.  261." 

Let  us  inquire  then  whether  the  price  of  corn  fluctuated 
more  during  the  period  of  the  bounty  than  at  any  other.  In 
order  to  ascertain  the  average  degree  of  variation  in  diiferent 
periods  of  20  years,  I  have  taken  the  average  price  of  the 
ten  dearest  years,  and  the  average  price  of  the  ten  cheapest 
years,  in  several  difl'erent  periods  of  twenty  years;  and  have 
set  down  the  ratios  of  the  higher  prices  to  the  lower.  And 
if  the  dearest  and  cheapest  single  years  in  any  twenty  be 
taken,  the  ratio  will  be  found  nearly  the  same : 

Ratio. 
From  1649  to  1668  as  39  to  17  as  170 

1669  -  1688  -  23  -  17  -  135 

1689  -  1708  -  25  -  14  -  178 

1709  —  1728  —  24  —  17  —  141 

1729  -  1748  -  18  -  13  -  138 

1749  —  1768  —  22  —  16  —  137 

1769  —  1788  —  26  -  21  —  123 

It  appears  that  the  variations  in  the  price  of  com  in  the 
twenty  years  immediately  preceding  the  grant  of  the  bounty, 
and  in  the  twenty  years  immediately  after  the  repeal  of  the 
bounty,  were  much  less  than  during  any  period  of  twenty  years 
during  the  existence  of  the  bounty.  I  have  made  the  calcula- 
tion in  different  ways,  and  can  venture  to  assert,  also,  that  the 
variation,  during  any  period  of  moderate  length,  since  the 
alteration  of  the  corn  laws,  in  1773  till  1794,  has  been  much 
less  than  during  any  period  of  the  same  length  while  the 
bounty  was  in  force. 


FINIS. 


o. 

Variation. 

100 

170 

100 

135 

100 

178 

100 

141 

100 

138 

100 

137 

100 

12311 

50 


Sir  Edwabd  West 


67 


APPENDIX, 


Prices  of  Wheat  per  Quarter  at  Windsor  Marlcet."^ 


68 


YEARS. 

Prices  of  Wheat, 

reduced  to 

the  Winchester 

Bushel 

of  8  Gallons. 

YEARS. 

Prices  of  Wheat, 

reduced  to 

the  Winchester 

Bushel 

of  8  Gallons. 

£.       s.        d. 

£.       s.        d. 

1646 

2         2         8 

1676 

1       13         9J 

1647 

3         5         5| 

1677 

1       17        4 

1648 

3       15         6f 

1678 

2       12         5J 

1649 

3       11         1\ 

1679 

2       13         4 

1650 

3         8         If 

1680 

2         0         0 

1651 

3         5         2J 

1681 

2         1         5f 

1652 

2         4         0 

1682 

1       19         li 

1653 

1       11         6f 

1683 

1       15         6f 

1654 

1         3         1^ 

1684 

1       19         IJ 

1655 

19         7^ 

1685 

2         1         5f 

1656 

1       18         2i 

1686 

1       10         2i 

1657 

2         1         5| 

1687 

1     2     ^ 

1658 

2       17         9i 

1688 

2         0       lOf 

1659 

2       18         8 

1689 

16         8 

1660 

2       10         2| 

1690 

1       10         9f 

1661 

3         2         2| 

1691 

1       10         2f 

1662 

3         5        9J 

1-692 

2         1         5i 

1663 

2       10         8 

1693 

3         0         If 

1664 

1       16         0 

1694 

2       16       lOf 

1665 

2         3       lOi 

1695 

2         7         IJ 

1666 

1       12         0 

1696 

3         3         li 

1667 

1       12         0 

1697 

2       13         4 

1668 

1       15         6f 

1698 

3         0         9 

1669 

1       19         5 

1699 

2       16       lOf 

1670 

1       17         Oi 

1700 

1       15         6f 

1671 

1       17         4 

1701 

1       13         5f 

1672 

1       16         5i 

.     1702 

1         6         2f 

1673 

2         1         5J 

1703 

1       12         0 

1674 

3         10^ 

1704 

2         14 

1675 

2       17         5f 

1705 

1         6         8 II 

*  These 
College,  to 


are  the  Prices  of  Mealing  Wheat ;  which  is  understood,  at  Eton 
be  of  a  middling  Quality. 


The  Application  of  Capital  to  Land 


51 


TEARS. 

Prices  of  Wheat,          1 
reduced  to               { 
the  Winchester 
Bushel 
of  8  Gallons. 

YEARS. 

Prices  of  Wheat, 

reduced  to 

the  Winchester 

Bushel 

of  8  Gallons. 

£.       s.         d. 

£.       s.        d. 

1706 

1         3         li 

1746 

1       14         8 

1707 

15         4 

1747 

1       10       Hi 

1708 

1       16       lOf 

1748 

1       12       lOf 

1709 

3         9         9J 

1749 

1       12       lOf 

1710 

3         9         4 

1750 

1         8       lOf 

1711 

2         8         0 

1751 

1       14         2f 

1712 

2         1         2^ 

1752 

1       17         2} 

1713 

2         5         4 

1753 

1       19         ^ 

1714 

2         4         9 

1754 

1       10         9J 

1715 

1       18         2J 

1755 

1       10         1 

1716 

2         2         8 

1756 

2         0         14 

1717 

2         0         7^ 

1757 

2       13         4 

1718 

1       14         6^ 

1758 

2         4         5^ 

1719 

1       11         li 

1759 

1       15         3 

1720 

1       12       lOj 

1760 

1       12         5^ 

1721 

1       13         4 

1761 

1         6         9f 

1722 

1       12         0 

1762 

1       14         8 

1723 

1       10       lOf 

1763 

1       16         If 

1724 

1       12       lOj 

1764 

2         1         5| 

1725 

2         3         1^ 

1765 

2         8         0 

1726 

2         0       lOf 

1766 

2         3         li 

1727 

1       17         4 

1767 

2       17         4 

1728 

2         8         5^ 

1768 

2       13         9^ 

1729 

2         17^ 

1769 

2         0         7 

1730 

1       12         5i 

1770 

2         3         6f 

1731 

1         9         2i 

1771 

2       10         8 

1732 

1         3         8i 

1772 

2       18         8 

1733 

1         5         2^ 

1773 

2       19         11 

1734 

1       14         6i 

1774 

2       15         li 

1735 

1       18         2f 

1775 

2       11         30. 

1736 

1       15       10^ 

1776 

2         2         8 

1737 

1       13         9J 

1777 

2         8       lOf 

1738 

1       11         6f 

1778 

2         4         0 

1739 

1       14         2f 

1779 

1       16         If 

1740 

2         5         1^ 

1780 

2         3         IJ 

1741 

2         1         5f 

1781 

2       12         5i 

1742 

1       10         2f 

1782 

2       13         9i 

1743 

12         1 

1783 

2       14         2f 

1744 

12         1 

1784 

2       13         9i 

1745 

1         4         5i 

1785 

2         8         0|j 

69 


52 


Sir  Edwabd  West 


YEARS. 

Prices  of  Wheat, 

reduced  to 

the  Winchester 

Bushel 

of  8  Gallons. 

YEARS. 

Prices  of  Wheat, 

reduced  to 

the  Winchester 

Bushel 

of  8  Gallons. 

£.       s.        d. 

£.       s.        d. 

1786 

2         2         2f 

1800 

6         7         0 

1787 

2         5         9i 

1801 

6         8         6 

1788 

2         9         4 

1802 

3         7         2 

1789 

2       16         If 

1803 

3         0         0 

1790 

2       16         1|- 

1804 

3         9         6 

1791 

2         9         4 

1805 

4         8         0 

1792* 

2       13         0 

1806 

4         3         0 

1798 

2       15         8 

1807 

3       18         0 

1794 

2       14         0 

1808 

3       19         2 

1795 

4         16 

1809 

5         6         0 

1796 

4         0         2 

1810 

5       12         0 

1797 

3         2         0 

1811 

5         8         0 

1798 

2       14         0 

1812 

6         8         0 

1799 

3       15         8 

1813 

6         0         0      * 

♦From  this  year,  inclusive,  the  account  at  Eton  College  has  been  kept 
according  to  the  Bushel  of  Eight  Gallons,  under  the  provisions  of  the  Act  of 
31  G.  3.  c.  30.  sect.  82, 


London.  Printed  by  U.  Roworth, 
Bell-yard,  Temple-bar. 


NOTES 

^  (page  9)  (a)  "  Report  from  the  Select  Committee  on  Petitions 
relating  to  the  Corn  Laws  of  this  Kingdom;  together  with  the 
Minutes  of  Evidence,  and  an  Appendix  of  Accounts.  Ordered,  by 
The  House  of  Commons,  to  be  printed,  26  July,  1814." 

(b)  "  Reports  respecting  Grain,  and  the  Corn  Laws:  viz: 
First  and  Second  Reports  from  the  Lords  Committees,  appointed 
to  enquire  into  the  state  of  the  growth,  commerce,  and  consump- 
tion of  grain,  and  all  laws  relating  thereto; — to  whom  were  re- 
ferred the  several  petitions,  presented  to  the  House  this  session, 
respecting  the  Corn  Laws. — 25  July,  1814.  Communicated  by  The 
Lords,  23d  November,  1814.  Ordered,  by  The  House  of  Commons, 
to  be  printed,  23  November,  1814." 

-  (page  11)  The  text  of  the  "  Wealth  of  Nations  "  used  and 
cited  by  West  is  apparently  that  of  the  ninth  edition  (3  vol.  8°. 
London,  1809);  the  "new  edition"  (3  vol.  8°),  issued  by  Cadell 
and  Davies  in  1812,  corresponds  in  pagination,  in  the  main,  with 
the  ninth.  This,  as  other  citations  from  and  references  to  Adam 
Smith's  work  in  West's  text,  contains  minor  inaccuracies,  notably 
an  unwarranted  use  of  italics. 

'  (page  20)  The  passage  actually  occurs  in  the  second  para- 
graph of  chapter  ix. 

*  (page  22)     In  the  original  text  an  asterisk  is  used. 

^  (page  25)     See  note  1,  above. 

«  (page  28)  "  The  Substance  of  the  Speeches  of  Sir  H.  Parnell. 
Bart  in  the  House  of  Commons  with  additional  observations  on 
the  corn  laws"  (London,  1814).  This,  as  well  as  subsequent 
citations,  contains  minor  typographical  inaccuracies. 

'  (page  32)     The  passage  is  quoted  loosely. 

*  (page  34)  "  Essays  and  Treatises  on  Several  Subjects.  In 
two  volumes.  By  David  Hume,  Esq.;  Vol.  1,  Containing  Essays, 
Moral,  Political,  and  Literary.     A  new  edition"   (London,  1764). 

»  (page  35)  "An  Essay  on  the  Principle  of  Population;  or, 
a  view  of  its  past  and  present  effects  on  human  happiness;  with 
an  inquiry  into  our  prospects  respecting  the  future  removal  or 
mitigation  of  the  evils  which  it  occasions  "  (2  vol.  3rd.  edit.  Lon- 
don, 1806).  West's  page  reference  to  Malthus's  text  is  incorrect, 
the  passage  actually  occurring  on  pp.  208-209. 

^^  (page  43)  "  Observations  on  the  Effects  of  the  Corn  Laws, 
and  of  a  rise  or  fall  in  the  price  of  corn  on  the  agriculture  and 
general  wealth  of  the  country"  (London,  1815). 


54 


Notes 


"  (page  43)  "A  Letter  on  the  Corn  Laws  "  (London,  1814). 

"  (page  43)     See  note  6,  above. 

"  (page  45)  "  Tracts  on  the  Corn  Trade  and  Corn-Laws.  By 
Charles  Smith,  Esq.  A  new  edition.  With  additions  from  the 
marginal  manuscripts  of  Mr.  Catherwood.  To  which  is  now  added 
a  supplement  of  interesting  pieces  on  the  same  subject.  With 
some  account  of  the  life  of  Mr.  Smith"  (London,  1804). 

"  (page  46)     See  note  9,  above, 

"  (page  49)     See  note  9,  above. 


=^^^^ 


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U.C.  BERKELEY  LIBRARIES 


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